According to the Wall Street Journal, Circle, BitGo and other cryptocurrency companies are planning to apply for banking licenses or other types of financial licenses to strengthen their connections with the U.S. banking system. Since the collapse of FTX and the closure of two crypto-friendly banks in 2022, the industry has been disconnected from traditional finance due to regulatory pressure. As the U.S. policy environment changes, some crypto companies are seeking to rebuild their ties with the banking system through compliance paths.

1. How to play cryptocurrency + banking license

In fact, many cryptocurrency companies have successfully applied for banking licenses. BPay Global, a subsidiary of Binance, has obtained a payment service provider (PSP) license issued by the Central Bank of Bahrain. This license allows Binance to provide fiat currency deposits, withdrawals and custody services in Bahrain, which not only provides users with a more convenient operating experience, but also enhances Binance's competitiveness in the Middle East market. Galaxy Digital, a cryptocurrency company founded by Mike Novogratz, and its British subsidiary Galaxy Digital UK Ltd. have obtained a derivatives trading license issued by the UK Financial Conduct Authority (FCA). Obtaining the FCA license not only enhances Galaxy Digital's market credibility, but also provides greater confidence to existing and potential investors, helping it to deepen its business in London, a key financial center, in its global expansion strategy.

SEBA Bank, a cryptocurrency bank headquartered in Switzerland, has obtained an operating license from the Hong Kong Securities and Futures Commission (SFC) for its subsidiary SEBA (Hong Kong) Limited in Hong Kong, allowing the company to operate cryptocurrency-related services in Hong Kong, manage investment portfolios with more than 10% of investment in virtual assets, and provide advice on virtual assets.

So why do cryptocurrency companies apply for banking licenses? This can be understood from the perspectives of expanding business scope, improving market competitiveness, and enhancing legitimacy and credibility.

(I) Expanding business scope

Enable cryptocurrency companies to carry out business operations in compliance with regulations and avoid legal risks caused by unclear business or illegal operations. For example, Hex Trust, which has obtained the Major Payment Institution (MPI) license issued by the Monetary Authority of Singapore, can provide regulated cross-border remittance services. It conducts exchange business between various legal currencies, as well as exchange between cryptocurrencies and legal currencies; Portugal's Bessan Bank provides customers with free exchange services between cryptocurrencies and legal currencies.

Provide commercial loans to cryptocurrency-related companies to support their business development, project development, etc. For example, it provides funds for cryptocurrency mining companies to purchase equipment and expand their scale, and loans are issued to qualified individual users, who can use cryptocurrency as collateral. For example, the "SEN Leverage" loan launched by Silvergate Bank allows customers to borrow US dollars with Bitcoin held in cooperative crypto asset exchanges as collateral. In addition, it may also help crypto projects to raise funds, such as raising funds for projects through the issuance of bonds and equity financing.

Provide various methods for cryptocurrency transactions, including online payment and offline payment. For example, cooperate with merchants to enable consumers to use cryptocurrency for shopping payments, ensure the smooth completion of transactions, improve transaction efficiency and reduce risks. For example, Bessen Bank can provide single-address or multi-address transaction collection, payment and clearing and settlement services for legal currency and cryptocurrency.

Provide customers with professional cryptocurrency custody, trust and investment and financial services. Many crypto institutions regard cryptocurrency custody as an important business after obtaining licenses. For example, Societe Generale's cryptocurrency department Forge can accept third-party digital asset orders and provide custody services after obtaining a license. Trust management of customers' crypto assets or legal currency assets, and asset allocation and management according to customers' wishes. Based on customer needs and risk preferences, provide customers with cryptocurrency portfolio management services to help customers realize asset appreciation; it can also develop cryptocurrency-related financial products, such as cryptocurrency funds.

Provide customers with financial consulting services related to cryptocurrency, including market analysis, investment advice, compliance consulting, etc. You can also conduct training business to help customers understand cryptocurrency and blockchain technology, and use the advantages of banking licenses to carry out cross-border cryptocurrency business, such as cross-border cryptocurrency transactions, fund transfers, etc., to provide services to global customers. For example, as a RMB clearing bank (CIPS) approved by the People's Bank of China, Bessen Bank has significant advantages in the field of cross-border payment and clearing, supporting the flow of funds worldwide.

(II) Enhance market competitiveness

The acquisition of a banking license means that the company must meet strict regulatory requirements, such as anti-money laundering and customer fund protection. This shows the market that the company's operations are standardized and compliant, which can greatly enhance the company's credibility in the eyes of users, investors and partners. For example, companies that have obtained a Major Payment Institution (MPI) license issued by the Monetary Authority of Singapore have certain strengths in compliance and risk management.

Banking licenses make it easier for cryptocurrency companies to establish partnerships with traditional financial institutions. Cooperation with traditional financial institutions can leverage their rich resources and customer base to expand business channels and enhance market competitiveness. For example, they can cooperate with banks to carry out fund custody, payment and clearing and other businesses, and cooperate with insurance companies to provide crypto asset insurance services. Cryptocurrency companies that have obtained banking licenses have more opportunities to participate in industry associations and standard-setting organizations, and discuss industry development trends and regulatory standards with their peers.

After obtaining a banking license, the company can accept deposits and thus obtain a stable source of funds. This reduces dependence on traditional bank loans or external financing, reduces financing costs and capital pressure, and enables companies to conduct business more flexibly and gain an advantage in market competition. Companies can take advantage of banking licenses to optimize the efficiency of fund operations, for example, by conducting interbank lending, fund settlement and other businesses, improving the efficiency of fund use and reducing the cost of idle funds.

(III) Enhance legitimacy and trust

Obtaining a license means that cryptocurrency companies have better guarantees for continued compliance. After obtaining a banking license, there are more opportunities to communicate with regulators. Through regular reports, meetings and other forms, the company can provide feedback to the regulator on the status of business development, understand the regulator's latest views and requirements on the industry, and obtain clear compliance guidance. This can show consumers, investors and partners that the company's operations follow strict financial regulatory provisions, enhance the trust of all parties in cryptocurrency companies, and attract more customers and funds.

For example, the United States requires virtual currency exchanges and custodian service providers to register as money service businesses (MSBs) and comply with the relevant provisions of the Anti-Money Laundering Act (AML) and the Bank Secrecy Act (BSA). This shows the society and the market that the cryptocurrency company's operations are carried out within the legal framework, so that its business operations have a legal basis.

The license review process covers the assessment of the company's financial status, management team, technical facilities and other aspects. The review shows that the company has met the standards set by the regulator in these aspects, showing its professional image to the market and thus enhancing the market's trust in the company.

Regulators require licensed cryptocurrency companies to establish a strict fund management system, such as implementing the isolation of customer funds and own funds to prevent misappropriation of funds and ensure the safety of customer funds. This provides a more reliable guarantee for customer funds, thereby enhancing customer trust in the company. Banking licenses require companies to have a sound risk control system to deal with various risks such as market, credit, and operation.

Second, Web3 may change the future global payment system

Web3 distributed ledgers are open and transparent, and users can track payment paths and transaction status in real time, which not only improves payment credibility, but also reduces fraud risks, and makes it easier for payment systems in different countries and regions to achieve seamless docking and interconnection, breaking down barriers between traditional payment networks and promoting the integrated development of the global payment market. In practice, Web3 payment provides a more efficient and low-cost payment solution for small and medium-sized enterprises that often face payment difficulties and high costs in cross-border trade, helping small and medium-sized enterprises to participate in global trade more conveniently, expand international markets, and promote the balanced development of the global economy; in the face of a complex international political and economic environment, Web3 payment can provide a way to bypass the restrictions of the traditional payment system, use the Web3 payment network for cross-border transactions, reduce the economic impact of sanctions, and enhance the resilience and flexibility of global payments.

With the continuous development and improvement of technology, and the gradual maturity of the regulatory environment, Web3 applications may play an increasingly important role in the field of global payment and settlement, and even objectively promote major changes in the payment and settlement system.

On the one hand, Web3 has introduced new payment methods and asset forms such as cryptocurrencies, stablecoins, and non-fungible tokens (NFTs), enriching the methods and choices of global payments, and even forming a new payment infrastructure. The development of Web3 payments has prompted competition and cooperation between traditional financial institutions and emerging Web3 companies. For example, stablecoins have the advantages of stable value and fast transfer in cross-border payments, providing a new payment medium for international trade and financial transactions. Traditional financial institutions need to actively explore Web3 technology and carry out digital transformation; and Web3 companies also need to cooperate with traditional financial institutions, using their resources and experience to jointly promote the innovation and development of the global payment system. On the other hand, with the globalization of Web3 payments, it is possible to establish a global collaborative rules framework. For example, the global PayFi initiative initiated by Klickl aims to connect financial institutions, technology companies and regulators, promote the collaborative sharing of global payment standards, compliance systems and liquidity resources, and build a more efficient, more inclusive and more open cross-border payment network.

Since 2025, US President Trump's series of reciprocal tariffs have had a multi-faceted impact on the global payment and clearing system. The imposition of tariffs has reduced the volume of cross-border e-commerce transactions, and small and medium-sized sellers who rely on low-price strategies have withdrawn, resulting in a short-term decrease in the number and amount of cross-border payments. The policy has caused turmoil in global stock markets and international trade, breaking investors' trust in the global trade order and causing global investors to have a crisis of confidence in US dollar assets, such as the selling of US bonds and the decline of the US dollar index, which in turn affects the stability of the global payment and settlement system dominated by the US dollar. Changes in tariff policies have increased compliance requirements for cross-border e-commerce transactions, and regulators have increased their attention to the cross-border payment industry. Payment institutions need to strengthen their review of transaction backgrounds and sources of funds, resulting in a significant increase in compliance costs. In the long run, in order to reduce risks, countries may explore the construction of a diversified international monetary system and settlement methods, explore the use of more technological innovations to solve cross-border payment and settlement problems, and promote the diversification of the global payment and settlement system, which may also provide an opportunity for the development of Web3 payment applications.