- Crypto firms Circle and BitGo plan to apply for U.S. banking licenses.
- Trump era policies spark renewed connections between crypto firms and banks.
Several major cryptocurrency companies, including Circle and BitGo, are planning to apply for banking licenses or other types of financial licenses. The strategy aims to enhance their relationship with U.S. banking corporations.
Trump Era Sparks Renewed Crypto-Banking Ties
Traditional finance lost its connection with the crypto industry when FTX collapsed, while crypto-friendly banks Silvergate and Signature Bank shut down operations in 2022. The banking world became inaccessible to numerous crypto firms because of these developments.
Now, things are changing. Big banks alongside crypto firms continue their efforts to regain entry into the United States financial sector, according to the Wall Street Journal. Several crypto firms pursue banking characteristics to expand their operation modes. Traditional banking institutions aim to provide customers with crypto-based services.
Two major financial institutions, such as Deutsche Bank and Standard Chartered, launched their crypto services overseas before starting to consider America-based client activities. Crypto avoided these banks until they shifted their stance and opened their doors to it. The regulatory situation has started to show greater clarity.
The Trump administration manifests its support for cryptocurrency through its positive stance. U.S. lawmakers and regulators encourage increased involvement from crypto companies through the changed political attitudes towards crypto. The new favorable approach from banks and crypto companies toward collaboration creates stronger confidence levels for them to establish partnerships.
The Office of the Comptroller of the Currency (OCC) issued a federal banking charter to Paxos in 2021 which marked a turning point in crypto institutional support. Paxos maintains operations as a stablecoin company and collaborates with PayPal in its business activities. Federal regulators issued the third-ever banking license to a company specializing in digital assets, which marks a turning point in the crypto industry’s access to mainstream banking services.
Crypto Firms Push into Traditional Banking Territory
Circle and BitGo have revealed their intention to seek complete banking charters from regulatory bodies. The companies plan to offer regular banking services including deposit facilities and loans after obtaining banking charters. These crypto companies intend to gain status as genuine banks according to their current plans.
At the same time, Coinbase and Paxos have been reported to examine the same venture. These entities view banking licenses because they believe these permits will strengthen their position with both regulators and customers.
Moreover, the U.S. Congress along with other entities is actively working toward new legislative solutions. The United States Congress considers two pending bills which seek to formalize stablecoins through legal procedures. Such proposed legislation would force stablecoin companies to obtain regulatory licenses alongside compliance criteria to operate. The laws successfully passed would enable people to transact cryptocurrencies under safer conditions while simplifying their purchase process.
Meanwhile, large American financial institutions Bank of America and U.S. Bancorp, evaluate their future involvement in the cryptocurrency market. The demand for digital assets has attracted their attention as they explore new methods to return to financial blockchain operations.
Ultimately, traditional financial institutions are presently losing distinction points when compared to crypto businesses. Regulations combined with powerful partnerships drive crypto businesses toward integration into traditional financial operations. Whether through banking licenses or regulatory support, the industry is preparing for a more connected future.
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