Cryptocurrency firms race to gain a banking foothold in the U.S.

Author: Nikou Asgari, Akila Quinio, Joshua Franklin Translator: Block unicorn

New York-based Circle said that obtaining a national bank trust charter would be an "important step" in the integration of digital assets into the broader financial system; Image source: Michael Nagle/Bloomberg

Cryptocurrency companies are racing to enter the traditional U.S. banking industry, hoping to take advantage of the friendlier regulatory environment under President Donald Trump and further integrate into the financial system.

Crypto payments group Ripple, stablecoin firm Circle and custodian BitGo have applied for national trust bank licenses, which would allow them to offer some banking services, while crypto exchange Kraken plans to launch a bank card next month.

“It’s a natural convergence,” Kraken co-CEO Arjun Sethi told the Financial Times, adding that the company plans to launch debit and credit cards around the end of this month.

The moves highlight how cryptocurrency companies are seeking to expand their business beyond just offering digital asset services. Industry executives have gained confidence due to the Trump White House’s openness to digital assets, while his predecessor Joe Biden was seen as hostile to the industry.

Crypto exchange Kraken co-CEO Arjun Sethi plans to launch debit and credit cards at the end of the month; Image credit: Ramsey Cardy/Sportsfile/Getty Images

New York-based Circle said obtaining a national bank trust charter from the Office of the Comptroller of the Currency (OCC), which oversees financial institutions, would be an "important step" in integrating digital assets into the broader financial system. Anchorage Digital is the only cryptocurrency company with a national bank charter.

“This is the exact opposite of the original philosophy of many crypto companies, which was, ‘We don’t need banks, we don’t need the law, we’re above everything,’ ” said Max Bonici, a partner at the law firm Davis Wright Tremaine. “Now they’re saying, ‘Please regulate us.’ ”

While national trust banks can custody assets and process payments, they can’t make loans or directly accept customer deposits. Obtaining national trust status would eliminate the need for companies to obtain separate licenses from states and improve their access to the financial system.

Crypto companies are accelerating their entry into the banking industry ahead of discussions in Washington about stablecoin legislation that would bring stablecoins, which supporters say can function like money, closer to the traditional financial system.

“It really opens up U.S. financial markets and basically allows stablecoins to emerge,” said Adam Chernichaw, a partner at Pillsbury.

Stablecoins track the price of national currencies such as the dollar and have become increasingly mainstream, with strong support from Trump and his administration. Traders use them to trade between sovereign currencies and cryptocurrencies, while others use them for cross-border payments.

The proposed Genius Act would increase regulation of stablecoins and tie them more closely to U.S. Treasuries, which are used to back stablecoins pegged to the dollar. Only regulated banks and some non-bank groups with OCC charters can issue stablecoins.

Ripple CEO Brad Garlinghouse said the company has also applied for a master account with the Federal Reserve, which would allow it to hold stablecoin reserves directly at the central bank.

Digital banking and cryptocurrencies are increasingly linked, with fintech companies increasingly looking to tap into the fast-growing crypto assets to attract U.S. customers.

Robinhood CEO Vlad Tenev said the company plans to launch a banking business in the fall; Image credit: Chris Ratcliffe/Bloomberg

Retail brokerage firm Robinhood, which generated more than half of its trading revenue from cryptocurrencies last year, plans to launch some banking services in the fall.

“We should be able to meet all your financial needs,” CEO Vlad Tenev told the Financial Times. “That way, you don’t have to worry about taxes, estate planning, and transferring money.”

London-based neobank Revolut, which also generates a large portion of its revenue from cryptocurrency trading, has a long-term goal of obtaining a U.S. banking license, while Klarna CEO Sebastian Siemiatkowski plans to add cryptocurrencies to the consumer lending company’s products.

Meanwhile, large banks including Bank of America are looking to issue their own stablecoins once U.S. regulation is finalized.

“This administration has said they will open up charter applications in a way that previous administrations have not,” said David Portilla, a partner in Davis Polk’s financial services group.

But not all cryptocurrency companies diversifying into traditional consumer banking see the need to apply for a banking license. Kraken, a crypto exchange with a Wyoming license, is launching its new app without having to apply for a license or a master trust.

“We don’t want to be a bank that provides mortgages. We just want to work with the partners who can provide the best service,” Sethi said.