Crypto Firms Circle, BitGo Seek US Bank Licenses Amid Regulatory Shifts

Crypto firms Circle and BitGo are reportedly planning to pursue US bank licenses, marking a significant shift in the integration of digital assets into the conventional banking system. This move comes after a period of regulatory crackdown following the collapse of crypto exchange FTX, which led many traditional financial institutions to withdraw their support from the digital asset market.

Several other crypto firms, including Coinbase Global and Paxos, are also considering similar steps. The Trump administration's recent vow to make America a "Bitcoin superpower" has signaled a potential change in the political climate, with Congress advancing legislation to create a regulatory framework for stablecoins. These proposed regulations would require stablecoin issuers to obtain charters or licenses from regulators, fundamentally altering the operational dynamics of the digital asset market.

Many firms are exploring options for national trust or industrial bank charters, which would allow them to function similarly to conventional banks by accepting deposits and making loans. Others are pursuing more specialized licenses that would enable them to issue stablecoins.

Any firm that secures a banking charter will face stricter oversight, as illustrated by Anchorage Digital, the only digital asset firm in the US to hold a federal bank charter. CEO Nathan McCauley has stated that the company has invested tens of millions of dollars to meet regulatory obligations, including stringent anti-money-laundering measures. Anchorage’s recent partnerships with major financial players, such as BlackRock and Cantor Fitzgerald, highlight the growing acceptance of digital assets within mainstream finance.

Just a few years ago, major banks severed ties with crypto firms amid regulatory scrutiny following the FTX incident. The fallout from the collapse of Silvergate Capital and Signature Bank left many crypto entrepreneurs struggling to find banking partners. However, the political climate is shifting, and under the current administration, regulators have begun to relax restrictions that previously required banks to obtain approval for crypto-related activities. New guidance on how banks can engage with crypto is anticipated later this year.

Some banks are eager to establish partnerships within the crypto space. For instance, Bank of America’s CEO Brian Moynihan expressed interest in issuing a stablecoin, contingent upon a solid legal framework. Similarly, US Bancorp recently announced plans to relaunch its digital asset custody service in collaboration with NYDIG, a Bitcoin trading and banking firm. Conversely, some banks remain cautious, viewing digital assets as both an opportunity and a competitive threat. KeyCorp’s CEO Chris Gorman emphasized the importance of understanding the evolving regulatory landscape, particularly concerning anti-money-laundering safeguards.

This shift towards mainstreaming crypto finance reflects a broader trend of integration between digital assets and conventional banking. As more firms pursue banking licenses and regulatory frameworks are established, the operational dynamics of the digital asset market are poised to undergo significant changes. The growing acceptance of digital assets within mainstream finance, coupled with the relaxation of regulatory restrictions, suggests a more favorable environment for crypto firms in the coming years.