Circle, the issuer of the USDC stablecoin, and BitGo, a digital asset custody provider, are reportedly planning to apply for U.S. banking licenses, according to an April 21, 2025, Wall Street Journal report. They aim to secure federal bank charters, enabling them to offer traditional banking services like deposit-taking and lending, and gain direct access to Federal Reserve payment systems. This move would also enhance their regulatory legitimacy, allowing better compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) rules, and potentially offering FDIC insurance.
Coinbase and Paxos are also exploring similar steps, with Paxos having received conditional approval for a U.S. bank charter in 2021. The push follows a more crypto-friendly regulatory environment under the Trump administration, which has relaxed restrictions on banks engaging with crypto firms. Congress is advancing stablecoin legislation, such as the STABLE Act and GENIUS Act, which would require issuers to obtain licenses, further driving these efforts.
The only crypto-native firm with a federal bank charter, Anchorage Digital, has faced significant compliance costs and is under investigation by the Department of Homeland Security, highlighting the challenges of stricter oversight. Meanwhile, traditional banks like Bank of America and U.S. Bancorp are showing renewed interest in crypto, with the former considering its own stablecoin and the latter relaunching custody services.
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Obtaining federal bank charters would enhance the credibility of crypto firms, signaling compliance with stringent U.S. banking regulations like AML and KYC. This could attract institutional and retail customers, boosting adoption of stablecoins like USDC and crypto custody services.
A banking license grants direct access to Federal Reserve payment systems, reducing reliance on third-party banks for settlement and custody. This could lower costs, improve transaction efficiency, and enable firms to offer FDIC-insured deposits, making crypto services more competitive with traditional banks.
Licensed crypto firms could provide traditional banking services such as lending, deposit-taking, and wealth management alongside crypto offerings. This convergence could blur lines between crypto and traditional finance, fostering innovation but also competition with established banks.
Operating as banks would subject these firms to rigorous oversight by federal regulators like the OCC and FDIC. While this ensures compliance, it increases operational costs and complexity, as seen with Anchorage Digital’s compliance challenges and ongoing DHS investigation.
The move by Circle, BitGo, Coinbase, and Paxos reflects a broader trend among crypto-native firms to integrate with traditional finance. This could pressure other crypto firms to seek licenses, while traditional banks (e.g., Bank of America, U.S. Bancorp) may accelerate their crypto offerings, intensifying market competition. Pending legislation like the STABLE Act and GENIUS Act, which mandate banking licenses for stablecoin issuers, aligns with these efforts.
A crypto-friendly Trump administration and bipartisan Congressional support could expedite approvals, shaping a clearer regulatory framework but potentially favoring larger players with resources to navigate compliance. Licensed crypto banks could stabilize the volatile crypto market by offering insured deposits and regulated services. However, their integration into the financial system might introduce systemic risks if crypto market volatility affects their banking operations.
Customers could benefit from safer, more accessible crypto services with FDIC protections and seamless fiat-crypto integration. However, increased compliance costs might lead to higher fees or reduced innovation in some crypto offerings. Overall, this shift could bridge crypto and traditional finance, but it hinges on navigating complex regulatory and operational challenges while balancing innovation with stability.