Banks Poised to Reenter Digital Asset Market in 2025

According to CoinDesk, 2025 is set to be a pivotal year for banks as they reengage with digital assets, reversing a period of caution influenced by regulatory and market challenges. The withdrawal of SAB 121 and new guidance from a major federal banking regulator have reignited interest across the banking sector, from credit unions and community banks to regional institutions and Wall Street giants. This renewed focus is driven by the need to maintain and grow client relationships in a competitive market where both retail and institutional participants are increasingly interested in digital assets. Leading banks will have the opportunity to differentiate their offerings and establish capital-efficient revenue streams. As banks navigate this landscape, they face critical decisions regarding custody solutions. Many may opt to license these solutions for in-house use or partner with crypto-native sub-custodians. Choosing the right custody partner is crucial, especially as cybersecurity incidents continue to make headlines. Banks must consider factors such as security, regulatory compliance, and time-to-market strategies. Partnering with a regulated custodian that has a robust risk management and compliance infrastructure can streamline a bank's go-to-market strategy. It is essential for banks and their crypto partners to align on regulatory standards to gain the confidence of regulators, senior bank leadership, and clients. Security and operational resiliency are paramount as banks venture into the crypto space. Banks aim to enter the market swiftly yet safely to preserve client trust. Therefore, they prioritize security when selecting a crypto custodian. An effective custody partner should employ a comprehensive security approach with multiple defense layers for each transaction. Additionally, ensuring that assets are legally separated from those of other clients and the firm can mitigate risks. Custody solutions must also meet the stringent operational resiliency standards expected of banks, enabling them to scale their digital asset business. Integration into existing systems and support for future product and revenue streams are also key considerations for banks. Incorporating crypto custody into core banking systems can enhance revenue opportunities, operational efficiency, and time-to-market. Secure custody forms the foundation for additional services such as collateralized lending, trading, and staking. As banks strive to meet client demand for full participation in the digital asset ecosystem, partnering with a custodian offering an integrated suite of services is essential. This year marks a significant shift in crypto adoption among traditional banks, with crypto-native custody solutions paving the way for competitiveness and client satisfaction.