Bridging Crypto and Banking: Why Crypto Firms Want Charters and What It Means

Crypto companies are increasingly pursuing traditional bank charters and licenses – a trend summed up by industry analysts as “if you can’t beat them, join them”. Rather than remain on the fringes, many crypto firms now aim to become regulated banks or quasi-banks. This shift is driven by the promise of access to payment infrastructure, enhanced trust and credibility, and the ability to expand into new financial products.

New laws governing stablecoins (in the U.S., EU, Hong Kong, etc.) effectively require issuers to meet bank-like standards, pushing stablecoin firms toward charters. In short, by obtaining banking licenses, crypto businesses seek to integrate themselves into the regulated financial system on their own terms.

Below we explain the motivations behind this movement, the types of charters available, global developments, case studies of leading companies, regulatory drivers, and the benefits and risks for users and markets.

Why Crypto Firms Are Seeking Bank Charters

Crypto firms have long struggled with banking access. Traditional banks have often been wary of servicing digital-asset companies due to AML concerns and uncertainty. Becoming a regulated bank addresses these issues. Key motivations include:

• Payments Infrastructure & On/Off Ramps: With a banking charter, a crypto firm gains direct access to systems like Fedwire, ACH and correspondent banking. As one advisory noted, a bank license “puts control of the on and off ramp in the hands of the crypto companies themselves, without having to go through intermediate banks”. This means crypto firms can move fiat in and out faster and with greater reliability. For example, Kraken Bank (a Wyoming SPDI) explicitly plans USD deposit accounts and wire transfers integrated with its exchange, enabling seamless fiat funding of crypto trades. In contrast, without a charter crypto firms must rely on third-party banks or payment processors, which have sometimes “red-flagged” crypto clients and blocked transfers.
• Trust and Credibility: Holding a banking license signals heavy regulatory oversight and safety. Acquiring a charter “would give firms a degree of trust” and allow services like deposit-taking and lending under supervision. Crypto customers and partners tend to view regulated status as a mark of legitimacy. CEOs themselves emphasize this: Circle’s Jeremy Allaire said becoming a national trust company was part of pursuing “the highest standards of trust, transparency, [and] compliance”. Bank regulation also requires capital cushions, audits and rigorous controls – factors that can reassure institutional clients.
• New Products and Services: A bank license enables crypto companies to launch mainstream financial products. For instance, Kraken Bank says its charter lets it custody crypto and hold USD with full reserves, issue debit cards, offer interest-bearing accounts, and plan tokenized assets. Similarly, Circle’s proposed trust bank would allow it to manage USDC reserves and custody clients’ tokens, potentially expanding into tokenized securities. Becoming a bank essentially lets crypto firms bundle exchange, custody, payments, and wallet services under one roof, rather than piecing them together via outside providers.
• Regulatory Compliance and Stablecoin Laws: New legislation is also a key driver. In the U.S., draft bills like the STABLE Act and GENIUS Act would require stablecoins to be issued by banks (or banks’ subsidiaries) and fully backed. Likewise, the EU’s MiCA framework classifies stablecoins as electronic money tokens (EMTs) that must be issued by licensed e-money institutions. Hong Kong’s upcoming stablecoin law similarly mandates licensing by the HKMA. Faced with these rules, stablecoin issuers such as Ripple and Circle are seeking bank charters in advance to ensure they can legally offer their tokens. In short, becoming a bank is now as much a defensive strategy to comply with regulation as it is a proactive move for business growth.

Together, these factors make banking charters attractive. As one blockchain executive put it, after decades of crypto debate, firms are “mainstreaming” by subjecting themselves to the same regulations as banks. This opens the door to products and clients previously out of reach, but also comes with the responsibilities of a regulated bank.

Types of Licenses and Charters for Crypto Firms

Crypto companies have pursued several regulatory pathways, each with distinct features and limitations. The main categories include:

• Traditional Commercial Bank Charter (Full Banking License): This is the standard license for banks – allowing deposit-taking, lending, payments and other services under full banking law. Obtaining a full charter is onerous, but it grants complete banking powers. A few crypto startups have taken this path. In Switzerland, for example, Sygnum and SEBA both received full banking licenses (plus securities dealer licenses) from FINMA in 2019. These Swiss crypto banks can operate like any other bank, offering loans, custodial services, and payment accounts for both crypto and fiat. However, most jurisdictions have not created specialized “crypto bank” charters – crypto firms usually adapt existing bank or finance licenses.
• Wyoming SPDI (Special Purpose Depository Institution) Charter: Unique to Wyoming (U.S.), the SPDI charter is a hybrid aimed at digital assets. SPDIs are state-chartered banks focused on custody and deposits rather than lending. They must hold 100% reserves against deposits and are not FDIC-insured. In practice, an SPDI (like Kraken Bank) can offer crypto custodial accounts, USD deposit accounts, and payment transfers, but cannot leverage deposits into loans. The SPDI is meant as a crypto-safe haven: Wyoming regulators oversee them, but they cannot go bankrupt by lending away depositor funds. (Kraken notes that if all clients withdrew simultaneously, it could honor every request thanks to 100% reserves.) However, because SPDIs lack FDIC insurance, depositors must bear that insurance risk themselves.
• National Trust Bank Charter (OCC Trust Charter): In the U.S., the Office of the Comptroller of the Currency (OCC) can issue national bank charters that function as trust banks. A national trust bank can hold assets in custody, provide clearing services, and manage reserves – but typically cannot take demand deposits or make loans. Anchorage Digital (a crypto custodian) won the first OCC trust charter in 2021, making it a fully regulated national bank devoted to crypto custody. Circle is applying for its own OCC trust charter to manage USDC reserves. Like SPDIs, trust banks signal high oversight; unlike SPDIs, OCC charters can clear between banks (FedMaster accounts) once approved. (Note: a trust charter holder in the U.S. is still a national bank and would be insured by the FDIC if it takes insured deposits, though most crypto trust charters plan no deposits.)
• Electronic Money Institution (EMI) License: In Europe under MiCA, stablecoins pegged to fiat are categorized as Electronic Money Tokens (EMTs). Issuers of EMTs must obtain an EMI license in an EU member state. This is akin to a fintech license for prepaid e-money (like PayPal), but for crypto tokens. For example, in 2023 Circle secured an EMI license in France to cover Euro-backed stablecoins. An EMI license lets a company issue digital currency for payment, redeemable 1:1 for fiat. It does not automatically grant crypto custody beyond that payment function; often, crypto firms must combine EMI licenses with separate digital asset licenses. EMI requirements include 100% reserves, safekeeping of funds, and oversight by financial authorities.
• Virtual Asset Service Provider (VASP) / Money Transmitter Licenses: These are licenses for exchanges, custodians, and wallets in many countries (e.g. EU’s VASP under MiCA, the U.S. money transmitter licenses, Singapore’s Payment Service license, etc.). They allow crypto trading and transfer services, but by themselves do not grant banking powers. Crypto companies often hold multiple such licenses. For instance, a firm might have an EU VASP license for exchanges, a U.S. Money Transmitter License, and a trust charter, covering different regions and services. VASP licenses typically require KYC/AML compliance but are geared to crypto brokerage/custody, not deposit-taking. In practice, crypto firms pursuing banking status often still maintain their exchange licenses alongside their bank charters, to cover spot trading and blockchain transactions under each regulator’s rules.
• Other Digital Bank/Fintech Licenses: Some jurisdictions offer “digital bank” or payment institution licenses that can be suitable. For example, Singapore has a Digital Full Bank license (for domestic retail banking) and Payment Institution licenses for digital token payments. The UK has an e-money license under its Financial Conduct Authority for crypto payments. These licenses often focus on digital payments or lending, and may allow integration of crypto rails depending on local policy. Notably, however, major jurisdictions like the U.S. and EU currently rely on the above categories (commercial banks, SPDI, trust banks, EMIs) rather than special crypto fintech licenses.

Each license type involves different trade-offs: SPDIs and trust charters are streamlined for digital assets but limit business scope, while full bank charters allow the broadest operations but have the strictest capital and compliance requirements. In many cases, crypto firms target the type of charter that best fits their core product (e.g. stablecoin issuers often go for trust or EMI licenses to handle reserves).

Global Landscape and Regulatory Context

Crypto banking is a global phenomenon, with different regions moving at their own pace:

• United States: The U.S. has been at the forefront of crypto bank charters. Wyoming’s crypto-friendly laws produced the SPDI model, first used by Kraken Bank and now by others like Custodia. Federally, the OCC under recent leadership has signaled openness: it eliminated previous restrictions (no-objection letters) and granted a charter to Anchorage Digital. Media reports in 2025 confirm that stablecoin issuers Ripple and Circle have applied for OCC charters, and Coinbase says it is “actively considering” a federal bank charter. These moves coincide with U.S. legislation: Congress is advancing stablecoin bills (STABLE Act, GENIUS Act) that would require issuers to be regulated by federal or state banking entities. Importantly, the Federal Reserve recently told its regional banks to drop “reputational risk” as a criterion for granting master accounts, which many saw as a green light for crypto firms to access Fed services. Still, some hurdles remain: Custodia Bank’s Fed master account application was denied in Jan 2023 on safety grounds, and AML concerns continue to loom.
• Europe (EU & UK): Europe’s regulatory regime is crystallizing under MiCA (Markets in Crypto-Assets). MiCA requires issuers of stablecoins (called Asset-Referenced Tokens or Electronic Money Tokens) to obtain an e-money license from an EU member state; for example, Circle took an EMI license in France for its Euro stablecoins. MiCA also demands 100% backing and public disclosures for stablecoins. In practice, major crypto firms want to be compliant: Kraken Ireland received a full EU VASP license to serve EU markets under MiCA. Traditional banks in Europe are also entering the stablecoin space – a Cointelegraph article notes that after initial reluctance, several European banks have applied to issue their own stablecoins. The UK (post-Brexit) is treating stablecoins as e-money under FCA guidance, meaning issuers will also need FCA authorization. While the ECB and Eurozone banks have been cautious on CBDCs, Europe broadly is preparing for crypto integration. Regulatory focus remains on stablecoins and AML rules (the ECB continues warnings on crypto liquidity and fraud).
• Switzerland: Switzerland has actively courted crypto finance. In 2019 FINMA granted the country’s first full “crypto bank” licenses: SEBA Bank and Sygnum Bank (both now rebranded under Swiss law). These banks offer services from token custody to brokerage and asset management for digital assets, under the same supervisory regime as any Swiss bank. FINMA imposed strict AML measures – for example, requiring that token transfers be traceable with sender/recipient info. In 2025 Swiss crypto banks remain innovative: AMINA Bank (a spin-off of SEBA) became the first regulated bank globally to support Ripple’s new RLUSD stablecoin, offering custody and trading of the token for institutional clients. Swiss authorities have also approved CHF-backed stablecoins and tokenized assets in pilot programs, cementing the country’s image as a digital finance hub.
• Asia (Hong Kong & Singapore): Hong Kong and Singapore are emerging as crypto gateways in Asia. Hong Kong has overhauled its rules: in mid-2023 it began licensing virtual asset trading platforms (VASP regime), and in 2025 passed a Stablecoins Bill requiring fiat-backed stablecoins to obtain a license from the Hong Kong Monetary Authority. The HKMA will set stringent rules on reserves, operations and consumer protection, essentially creating a “central bank-approved” stablecoin class. This reflects a pro-innovation stance – regulators differentiate stablecoins from CBDCs to foster digital assets alongside Hong Kong’s financial markets. In Singapore, regulators have also been active: MAS released a stablecoin framework (late 2022) demanding 100% high-quality reserves and disallowing certain yields. Singapore granted four digital bank licenses in 2020 (to non-crypto firms like Grab/Sea/Ant), but is not issuing new ones currently; instead, Singapore crypto firms typically operate under Major Payment Institution licenses for digital payment tokens. Overall, both HK and Singapore emphasize stability and compliance (full reserves, audits) for crypto assets, making licenses harder to get but more credible once obtained.
• Middle East (UAE, etc.): The UAE has created multiple crypto-friendly zones. Regulators like the Dubai Virtual Asset Regulator (VARA) and Abu Dhabi’s ADGM (FSRA) license crypto exchanges and asset managers under clear rules. The UAE is also encouraging digital banking innovation. Notably, Dubai’s Ruya Bank launched as the world’s first Islamic digital bank offering Shariah-compliant crypto trading. While most licensers focus on crypto brokerage, a few fintech players (like Adadash) are pursuing crypto-bank hybrids. The UAE’s approach balances rapid adoption with stringent supervision – for instance, all crypto tokens are regulated under a payments law. Other Middle Eastern centers (e.g. Bahrain) have also issued crypto licenses. Overall, the region sees crypto finance as a growth sector, though the concept of crypto banks is still nascent compared to Western models.

In summary, crypto banking charters are spreading worldwide. In each jurisdiction, firms tailor their strategy to local rules – obtaining a Wyoming SPDI in the U.S., an OCC charter, an EU EMI license, or a FINMA crypto banking license – all with the goal of legalizing their core crypto services.

Case Studies of Crypto Companies Becoming Banks

Below are examples of notable crypto firms (or related entities) pursuing or obtaining bank-like licenses:

• Kraken Bank (Wyoming SPDI): In 2020, Kraken was the first major crypto exchange to win approval for a Wyoming Special Purpose Depository Institution charter. Kraken’s blog explains that as an SPDI it will maintain 100% fiat reserves and offer USD deposit accounts, crypto custody, wire transfers and other banking services to its clients. Kraken emphasizes that the SPDI lets it act as a “digital-asset bank”, bridging crypto with traditional finance. (Kraken Bank will be regulated by Wyoming’s Division of Banking, with ongoing audits, but – like all SPDIs – will not be FDIC-insured.)
• Custodia Bank (Wyoming SPDI): Custodia is another Wyoming-chartered SPDI intended as a stablecoin bank. In late 2022 it applied for a master account at the Federal Reserve (to connect to payment systems). However, in January 2023 the Fed publicly denied Custodia’s application. The Board cited Custodia’s “novel business model” and crypto focus as posing “significant safety and soundness risks”. In particular, Custodia’s plan to issue digital assets on decentralized networks was deemed inconsistent with safe banking practices. The Custodia episode illustrates that not all regulators share the crypto-friendly approach; although a state SPDI was granted, federal backing remains a barrier. (Custodia has indicated it will continue pursuing Fed membership under revised criteria.)
• Anchorage Digital (OCC Trust Charter): Anchorage Digital (an institutional crypto custodian) became the first crypto company to receive a national bank charter when the OCC granted it a national trust bank charter in 2021. As a trust bank, Anchorage can act as a qualified custodian for digital assets and participate fully in Fed payment services. CEO Nathan McCauley has noted that working “hand-in-hand” with the OCC over four years delivered regulatory clarity unmatched elsewhere. Anchorage now offers custody, staking and other crypto services under strict regulatory compliance.
• Circle (OCC Trust Bank Application): Circle Internet Financial, issuer of the USDC stablecoin, announced in mid-2025 that it is applying to charter a national trust bank (to be called “First National Digital Currency Bank, N.A.”). If approved by the OCC, Circle’s trust bank would enable it to directly hold and manage USDC’s dollar reserves on behalf of customers. Allaire explained that this move follows Circle’s IPO and is about achieving the “highest standards of trust, transparency, and governance” for its financial operations. Unlike a commercial bank, Circle’s trust charter would not allow general deposits or loans; it is tailored for reserve management and crypto custody. Circle’s timing closely aligns with impending U.S. stablecoin legislation (the bill passed the Senate in mid-2025), suggesting the bank plan is aimed at being a compliant stablecoin issuer under the new rules.
• Ripple (OCC National Bank Charter Application & RLUSD): Ripple Labs (associated with the XRP Ledger) disclosed in July 2025 that it has applied to the OCC for a national bank charter. This application makes Ripple the second crypto firm (after Circle) publicly known to seek federal bank status. Ripple’s goal is to “expand its crypto services under federal regulation” as stablecoin laws advance. At the same time, Ripple launched its own stablecoin (RLUSD) and has been integrating it with banking partners. Notably, Swiss crypto bank AMINA announced it will custodially trade RLUSD (see below), indicating Ripple’s push to treat its stablecoin as a licensed banking product. The dual strategy of charter-seeking and stablecoin issuance highlights Ripple’s bet that regulated financial status will be crucial for crypto-native firms.
• Coinbase (Federal Charter Consideration): Coinbase, one of the world’s largest crypto exchanges, has publicly confirmed it is “actively considering” applying for a federal banking charter. Media reports (WSJ/Banking Dive) identified Coinbase alongside BitGo, Circle and Paxos as planning to seek charters. Coinbase’s interest reflects the broader industry trend. Experts note that recent changes at the OCC (removing the ‘supervisory non-objection’ policy) make such charters more attainable than before. If Coinbase pursues a charter, it could integrate its exchange wallet with insured deposit accounts, though it would have to meet all banking capital and consumer-protection requirements. As of mid-2025, no formal application had been submitted, but Coinbase’s public statements indicate it wants to own more of the crypto-to-fiat infrastructure.
• Sygnum and SEBA (Swiss Crypto Banks): In August 2019 Switzerland approved the world’s first regulated crypto banks. Zug-based SEBA Bank and Zurich-based Sygnum Bank each received banking and securities-dealer licenses from FINMA. These banks combined traditional finance capabilities with crypto services: offering deposits, asset management, tokenization of securities, and crypto trading/custody. Co-founder Manuel Krieger of Sygnum hailed the license as an “important step towards the institutionalisation of the digital asset economy”. Both banks now serve institutional and private clients who want regulated access to digital assets. They continue to expand services (e.g. Sygnum obtained additional FINMA permissions for tokenized assets, SEBA launched tokenized bond offerings). Their success exemplifies a full “crypto bank” model under strict supervision.
• AMINA Bank (Swiss Crypto Bank & RLUSD Support): In Switzerland, AMINA Bank (formerly part of SEBA/AMINA) is a new crypto-focused commercial bank licensed by FINMA. In July 2025, AMINA announced it is the first global bank to offer services for Ripple’s RLUSD stablecoin. Specifically, AMINA will provide institutional clients with custody and trading for RLUSD, which is backed by U.S. Treasury assets. AMINA CEO said the move “aims to bridge traditional banking and crypto infrastructure”. This is a concrete example of a licensed bank embracing crypto innovation: by integrating RLUSD into its platform, AMINA connects a digital-asset stablecoin directly to regulated banking rails. Other Swiss banks are reportedly exploring similar collaborations.

Each of these case studies highlights how crypto firms are intersecting with banking. Firms like Kraken and Circle seek charters to solidify core functions (USD custody, stablecoins). Established crypto custodians like Anchorage show how a charter can enhance trust. And forward-looking banks like AMINA demonstrate how incumbents are adopting crypto. Across the board, these companies stress regulatory compliance: they view licenses not as a constraint, but as a foundation to scale digital finance globally.

Regulatory Drivers: Stablecoins and Financial Integration

The move toward banking licenses is closely tied to global regulatory changes, especially around stablecoins and “payment rails” integration. Key drivers include:

• Stablecoin Legislation: Lawmakers worldwide are drafting bills that treat stablecoins like bank deposits. In the U.S., for example, the GENIUS Act (Sen. Scott et al.) and STABLE Act (Reps. Frankel et al.) propose that stablecoin issuers be federally chartered, fully backed and compliant with banking safeguards. Similarly, Europe’s MiCA classifies major stablecoins as electronic money requiring bank-like licensing. Hong Kong’s new law will require HKMA licenses for fiat-pegged stablecoins. These laws effectively force stablecoin companies (like Tether or USDC issuers) to operate under banking frameworks. As CoinDesk reports, Ripple, Circle and others are explicitly aligning with this trend.
• Payment System Access: Central banks recognize that having crypto firms on the Fedwire or equivalent can improve payments efficiency, especially for tokenized assets. The U.S. Federal Reserve recently signaled a policy shift: it told regional Fed Banks to stop using “reputational risk” as an excuse to deny accounts and is providing clearer guidance for banks to service crypto businesses. This change was part of President Biden’s 2022 Executive Order to ensure “fair and open access to banking services” for crypto (addressing crypto de-banking concerns). By unlocking master accounts and clarifying rules, regulators are creating the conditions for crypto banks to actually hold reserves and settle transactions, which is a precondition to fully becoming banks.
• AML and Compliance Pressure: Ironically, the stringent AML and KYC requirements that deterred banks from crypto are now being baked into law for crypto licenses. FinCEN and the OCC already require “extensive due diligence” on crypto clients. New charters will force crypto firms to adopt the same anti-money-laundering regimes as any financial institution. For example, the Wyoming SPDI and U.S. trust charters must adhere to banking-age AML rules. In Europe, MiCA imposes AML obligations on crypto-asset service providers (exchanges, wallet providers) as well as stablecoin issuers. In practice, these regulations make operating outside the formal banking system riskier, incentivizing firms to legitimize via charters.
• Global Financial Integration: Beyond specific laws, there is a broader trend of integrating crypto into the traditional system. Central banks and regulators (e.g. ECB, Fed) are experimenting with wholesale CBDCs and tokenized central bank money. Financial market infrastructures are considering supporting tokenized assets. In this context, crypto firms want to be on the inside. A digital currency or stablecoin that flows through regulated banks can be used in everyday finance (payments, remittances, markets). As one industry observer noted, stablecoins have evolved from “bridges” to crypto into “core plumbing” of finance. Becoming a bank allows crypto companies to plug their technology into the plumbing, which in turn motivates regulators to license them properly.

In summary, evolving regulation is both a carrot and a stick. On one hand, planned laws reward chartered entities. On the other, they penalize unlicensed crypto activity. Combined with regulators’ interest in modernizing payments, these drivers make banking licenses central to any major crypto firm’s growth strategy.

Benefits and Risks for Users, Institutions, and the Financial System

Becoming banks would have wide-ranging implications:

• For Retail Users: A crypto company with a banking charter can offer customers more traditional products and protections. Consumers could open accounts with familiar features (interest-bearing deposits, ACH transfers, debit cards) directly with crypto firms. They may feel more secure dealing with a bank that is audited and regulated. On the flip side, retail users must be aware of the charter’s limitations. For example, Wyoming SPDIs require 100% reserve backing, but they explicitly lack FDIC insurance. In practice, this means if an SPDI failed, depositors might not get government-backed protection. (Kraken has noted this tradeoff upfront.) Another risk is loss of anonymity: bank regulations force identity verification on customers, changing the privacy profile of some crypto services. Overall, users gain convenience and regulatory oversight at the cost of the extreme privacy and decentralization once touted by crypto.
• For Institutions: Traditional financial institutions could see benefits and competition. Crypto-native banks could partner with or undercut incumbents. For example, a crypto exchange with a bank charter could on-ramp new retail investors more cheaply. Conversely, big banks themselves may issue their own stablecoins (as some U.S. and German banks have started) or even acquire crypto bank subsidiaries. Institutional crypto custodians benefit from charters by being able to keep client assets on balance sheet with Fed privileges, making them appear as credible custodians. However, these institutions also take on new risks: operating a bank means strict capital, liquidity, audit and compliance obligations. Any misstep (cyberattack, fraud) can also result in regulators pulling charters. The collapse of crypto-friendly banks in 2023 (Silvergate, Signature, SVB) is a cautionary tale that integration brings heavy scrutiny.
• For the Financial System: Overall, bringing crypto into formal banking may improve stability of crypto-based payments and narrow the divide between fiat and digital assets. Tying stablecoins to regulated banks can enhance reserve transparency and trust. Payment systems could become faster and more inclusive with blockchain rails. On the risk side, there is the question of systemic impact: if crypto banks grow large, their problems could spill over. Regulators worry about contagion from algorithmic stablecoins or tokenized assets that behave differently from deposits. Also, crypto “shadow banking” networks might shift to newly chartered entities, potentially evading tougher rules. Effective oversight and coordination among regulators will be needed to mitigate money laundering, fraud or cyber risks introduced by new players. In sum, licenses promise tighter control, but only if properly enforced – otherwise, they could lend legitimacy to risky crypto business models.

Traditional Banks Entering Crypto vs. Crypto Firms Becoming Banks

The current shift involves both sides of the fence. Established banks are cautiously entering crypto, while crypto companies strive to “become banks” themselves.

• Traditional Banks in Crypto: Banks like JPMorgan, Goldman Sachs and BNY Mellon have launched crypto custody or token initiatives. In the U.S., some banks resisted stablecoins initially, but later launched their own (e.g. JPM’s token for institutional payments). Large banks may partner with licensed crypto firms or seek regulated stablecoin platforms, rather than directly handling retail crypto. Their advantage is existing charters, capital, and customer bases. But banks must adapt to crypto’s speed and tech: for instance, BNY Mellon manages Circle’s reserves and custody as a trusted partner. Traditional banks also worry about risks and compliance burdens, and may choose to focus on the safest crypto segments (stablecoins, tokenized bonds).
• Crypto Firms as Banks: Crypto-native firms were born outside regulation, but now willingly accept oversight to gain legitimacy and reach. This means some erosion of crypto’s anti-establishment ethos. As one analyst noted, firms adopting charters “will lose some independence” as they are folded into the conventional financial framework. On the other hand, crypto firms bring technological innovation: they can pioneer blockchain-based products within a regulated envelope. For example, a crypto exchange-bank might natively integrate on-chain tokens with deposits or loans. They also tend to have global, tech-savvy cultures which can accelerate fintech adoption in banking. In effect, each side offers the other strengths: banks supply trust and scale, crypto firms inject new assets and customers. How this plays out will depend on regulatory clarity and market demand.

Compliance Burdens and Regulatory Hurdles

Pursuing a bank license is not easy. Crypto firms face extensive compliance requirements and potential barriers:

• Capital and Prudential Rules: Banks must maintain minimum capital ratios and liquidity buffers. Crypto firms, which until now largely held custodial assets off-balance-sheet, will need to hold their own equity and reserves. For an SPDI, Wyoming requires 100% reserves but no loans; a national bank must meet federal capital requirements. These rules can limit product flexibility (e.g. Circle’s trust bank can’t lend out the U.S. Treasury securities backing USDC).
• Anti-Money Laundering (AML) and KYC: Banks are subject to stringent AML laws. Crypto firms historically argued that blockchain transparency would mitigate risk, but in practice regulators still demand traditional KYC. FinCEN and the OCC require “extensive due diligence” on crypto clients. Bank examiners will expect crypto banks to have robust transaction monitoring, sanctions screening, and controls over virtual asset flows. For example, bank regulators have flagged crypto remittances as an AML risk. Developing and operating these systems is costly and complex. Firms will need specialized compliance teams and auditors. The nightmare scenarios of “anonymity” on blockchains are being tackled: Swiss rules already forbid anonymous crypto transfers, and U.S. banks (including crypto banks) must freeze transactions for sanctioned addresses.
• Federal Reserve Master Accounts: In the U.S., having a master account at the Fed is critical for payments. Crypto banks have long sought Fed accounts. The 2023 Fed stance change helps, but each institution must still petition a regional Fed bank. Even for a state-chartered SPDI, getting access to FedWire or FedNow is non-trivial: it requires satisfying the Fed’s risk criteria. The denial of Custodia’s Fed application shows regulators remain cautious. Firms must demonstrate they have credible risk management and aren’t a flight risk to crypto-only banking. A master account also comes with supervisory exams and Fed fees, which crypto firms historically lacked.
• Regulatory Fragmentation: Crypto firms often chase multiple licenses in different jurisdictions. A typical U.S. crypto bank may need federal (OCC) and state (NYDFS or Wyoming) charters, SEC/FINRA approvals for any securities activities, and money transmitter or e-money licenses for U.S. states. In the EU, a MiCA-regulated stablecoin issuer needs an EMI license in one country and passporting to others. Singapore or Hong Kong require local licenses under their frameworks. Maintaining compliance across this patchwork is burdensome: firms face annual exams by different regulators (OCC, FDIC, FINMA, FCA, SFC, MAS, etc.), each with its own rules. Adam Shapiro of Klaros Group notes that a federal charter can reduce the duplicative state exams: “A federal charter would cut down on duplicative requirements” versus holding many state trusts.
• Legal Uncertainties: While laws are evolving, they are not fully settled. In the U.S. there remains legal debate over crypto classification (SEC vs. CFTC jurisdiction). A court might rule a particular token is a security or commodity, affecting how it can be held in a bank. Regulatory guidance on crypto accounting (e.g. SAB 121) has discouraged banks from holding assets. Crypto banks must navigate this uncertainty continually. They also risk political shifts: for instance, if a new administration took a hard line on crypto, some prior approvals could be revisited.

In sum, securing and operating under a bank charter demands a full transformation of a crypto firm into a regulated bank. This entails building out compliance staff, implementing banking software and controls, and submitting to continuous oversight – all of which raise costs. Many crypto executives argue it is worth the investment to access banking infrastructure; critics warn the burdens are substantial and may discourage smaller players.

Future Outlook

The cryptocurrency industry’s relationship with banking is still in flux. As of 2025, a handful of crypto firms have achieved or sought bank charters, but many questions remain about scale and impact. Looking ahead:

• Increasing Charter Approvals: With new regulations favoring crypto banks, more applications are expected. Observers note that “more federally chartered digital asset banks” would benefit consumers and markets. Established crypto firms (Coinbase, Paxos, Gemini etc.) may follow the path of Circle and Ripple, especially if Congress passes stablecoin legislation. Banks themselves (large and niche) are laying groundwork to offer crypto services under these new regimes.
• Consolidation or Specialization: We may see consolidation, where only well-capitalized crypto institutions survive as banks, while others partner or exit. Alternatively, new special-purpose banks may emerge serving only stablecoins, tokenization, or custodial functions. Traditional banks might spin off crypto units that seek charters.
• Technological Integration: In time, the lines between crypto banking and fintech may blur further. Tokenized securities, crypto lending and on-chain settlements could operate through regulated portals. For instance, tokenized stocks might trade on digital exchanges with real-time fiat settlement, all cleared through chartered crypto banks. If stablecoins indeed become “core plumbing”, then being a licensed custodian of such coins could be as ubiquitous as being a member of SWIFT today.
• Regulatory Evolution: Regulators around the world will keep adjusting rules. We may see international standards for crypto banks emerge (e.g. from the Basel Committee or FATF). Standardization of capital treatment for crypto assets on bank balance sheets will be critical. Also, as CBDCs advance (or stall), their relationship with regulated private stablecoins will shape demand. Crypto banks will need to adapt to each new policy shift, from tax treatment of digital assets to consumer data rules.
• Consumer Impact: Ultimately, how many crypto banks succeed will affect end users. In the best case, consumers gain more choice in payments and earn yields on digital assets through insured accounts. In the worst case, regulatory failures or bank failures could erode trust. The industry’s emphasis on compliance suggests a recognition that long-term viability depends on stability, not on “crypto only” risk-taking.

In the next few years, it is likely we will see a gradual mainstreaming: crypto firms that secure licenses could become just another class of bank, albeit specialized. The “crypto bank” label may fade into the broader category of digital banks or fintech banks. Observers will be watching whether this brings about a truly integrated digital financial system, or just a new chapter in the age-old cycle of regulatory catch-up to financial innovation.