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Crypto Firms Circle, BitGo Seek U.S. Banking Licenses Amid Regulatory Shift

Coin WorldMonday, Apr 21, 2025 4:01 pm ET

1min read

Crypto firms Circle and BitGo are planning to apply for U.S. banking licenses, marking a significant shift in their strategic approach to enhance their relationship with traditional banking corporations. This move comes as several major cryptocurrency companies are exploring the acquisition of banking licenses or other types of financial licenses to expand their operational capabilities.

The collapse of FTX and the subsequent shutdown of crypto-friendly banks Silvergate and Signature Bank in 2022 had severed the connection between traditional finance and the crypto industry. However, the regulatory landscape is now showing signs of improvement, with big banks and crypto firms actively seeking to regain entry into the U.S. financial sector. This renewed interest is driven by the changing political attitudes towards cryptocurrency, with the Trump administration manifesting its support through a positive stance. U.S. lawmakers and regulators are encouraging increased involvement from crypto companies, fostering a more favorable environment for collaboration between banks and crypto firms.

In 2021, the Office of the Comptroller of the Currency (OCC) issued a federal banking charter to Paxos, a stablecoin company that collaborates with PayPal. This marked a turning point in crypto institutional support, as it was the third-ever banking license issued to a company specializing in digital assets. This development has paved the way for other crypto firms to consider similar ventures, with Circle and BitGo revealing their intention to seek complete banking charters. These companies plan to offer regular banking services, including deposit facilities and loans, after obtaining the necessary licenses, aiming to gain status as genuine banks.

Coinbase and Paxos are also reported to be examining the possibility of acquiring banking licenses, viewing them as a means to strengthen their position with both regulators and customers. The U.S. Congress is actively working toward new legislative solutions, with two pending bills seeking to formalize stablecoins through legal procedures. Such proposed legislation would require stablecoin companies to obtain regulatory licenses and comply with criteria to operate, enabling safer cryptocurrency transactions and simplifying the purchase process.

Large American financial institutions, such as Bank of America and U.S. Bancorp, are evaluating 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 losing their distinction points when compared to crypto businesses, as regulations and powerful partnerships drive crypto firms 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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