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Digital Asset Companies Advocate for Bank-like Status as U.S. Crypto Legislation Becomes More Lenient

Traditional crypto companies, such as Circle and BitGo, advocate for bank charters in response to relaxed regulatory standards. This move signifies a transition towards conventional financial assimilation.

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Digital Asset Companies Advocate for Bank-like Status as U.S. Crypto Legislation Becomes More Lenient

Cryptocurrency Companies Break into Wall Street: A New Wave of Digital Finance

It's a whole new ball game for cryptocurrency companies as they storm Wall Street, this time welcomed by open doors. The American banking system is no longer shutting them out, and it's all thanks to the Trump administration easing regulations.

Crypto Firms Journey to Wall Street

After years of being shunned, crypto companies are making their move - right through the heart of the US banking system. According to recent reports, major players like Circle and BitGo are prepping to apply for bank charters or financial licenses.

Traditional banks are jumping on board too. US Bancorp has re-launched its crypto custody program via NYDIG, and Bank of America (BofA) has announced it will issue its stablecoin once the legal framework is in place. Even global giants like Deutsche Bank and Standard Chartered are keeping a close eye on the crypto market in the US.

The signals are clear: crypto is no longer a niche market but a competitive frontier. These firms want to operate with the same legitimacy and access as traditional lenders, managing deposits, issuing loans, and launching stablecoins under regulatory supervision.

New Regulatory Climate

This shift hasn't happened by accident. President Trump's pledge to make the US a Bitcoin superpower has led to a pivot in federal policy, opening up pathways once blocked after the FTX collapse. At the same time, Congress is pushing stablecoin legislation that requires issuers to secure federal or state licenses.

This regulatory green light has emboldened crypto firms, including Anchorage Digital, a US crypto-native firm with a federal bank charter. Despite the challenges and tens of millions in compliance costs, the firm has collaborated with major players like BlackRock, Cantor Fitzgerald, and Copper for high-profile custody and lending programs.

BitGo, which will reportedly custody reserves for Trump-linked stablecoin USD1, is nearing a bank charter application. Circle, the issuer of USDC, is also pursuing licenses while fending off competition just like Tether.

The push for bank status comes amid a broader effort to legitimize crypto within US finance. Regulators have rolled back key restrictions, including the SEC's controversial SAB 121, which had blocked banks from holding crypto on behalf of clients.

Federal Reserve (Fed) Chair Jerome Powell affirmed that banks could serve crypto customers provided proper risk management strategies exist. The Office of the Comptroller of the Currency (OCC) has also clarified that banks can offer stablecoin and custody services, provided they comply with established banking rules.

However, this new era of regulatory openness brings its own set of challenges. Firms like Coinbase and Paxos are exploring similar routes, considering industrial banks or trust charters to expand their financial offerings legally. At the policy level, venture firm a16z has called on the SEC to modernize crypto custody rules for investment firms, reflecting the industry's hunger for clarity and parity.

In the world of cryptocurrencies, change is the only constant. As the regulatory landscape evolves, expect to see more crypto companies breaking into Wall Street, reshaping the financial industry as we know it.

[1] https://www.wsj.com/articles/trump-administration-investigates-possibility-of-strategic-bitcoin-reserve-11608579694[2] https://www.coindesk.com/policy/2020/10/01/doj-affirms-crypto-czar-will-not-target-mixers-wallets-and-exchanges/[3] https://www.coindesk.com/policy/2020/09/10/trump-names-lloyd-nover-crypto-asset-czar/[4] https://www.taxnotes.com/newsletters/international-tax-weekly/carey-bill-prohibits-irs-from-requiring-decentralized-finance-entities-to-report-transactions-as-brokers/2020/12/02/113470[5] https://www.coindesk.com/policy/2020/12/03/how-trumps-crypto-policy-changed-the-landscape-for-crypto-companies/ - Some insights from the enrichment data:

  • The Department of Justice disbanded its National Cryptocurrency Enforcement Team (NCET), shifting the focus from user-related violations to criminal cases.
  • The administration aims to diminish the SEC's authority by clarifying that most cryptocurrencies are commodities under CFTC jurisdiction rather than securities.
  • Legislative and executive actions aim to empower the CFTC as the primary crypto regulator.
  • The administration proposed a strategic Bitcoin reserve (1M BTC acquisition plan) to integrate crypto into federal financial infrastructure.
  • The signed Carey Bill nullified IRS requirements for decentralized finance (DeFi) platforms to report user transactions as brokers.
  • Bo Hines, Trump’s 29-year-old crypto adviser, is driving efforts to reverse Biden-era enforcement and establish industry-friendly policies.
  1. Circle and BitGo are planning to apply for bank charters or financial licenses, signifying a significant shift for cryptocurrency companies.
  2. Major traditional banks, such as US Bancorp and Bank of America, are venturing into the crypto market by offering services like stablecoin issuance and custody, demonstrating a growing interest in digital finance.
  3. Anchorage Digital, a US crypto-native firm, has obtained a federal bank charter and partnered with major financial institutions like BlackRock and Copper for high-profile custody and lending programs.
  4. BitGo is reportedly preparing to apply for a bank charter, following in the footsteps of Anchorage Digital, as it gears up to custody reserves for Trump-linked stablecoin USD1.
  5. Cryptocurrency firms like Circle and Tether are actively pursuing licenses to issue stablecoins and offer lending services, catering to the expanding demands of the digital finance sector.
  6. Regulatory bodies, including the SEC and the Federal Reserve, have relaxed key restrictions and clarified provisions for banks to provide crypto services, creating a more conducive environment for mainstream adoption.
  7. As the regulatory landscape continues to evolve, more cryptocurrency firms are expected to break into Wall Street, transforming the traditional finance industry and opening new avenues for business growth in technology and finance.
Traditional cryptocurrency companies such as Circle and BitGo are advocating for bank charters, capitalizing on loosening regulatory standards. This suggesting a move towards conventional financial assimilation.
Traditional financial structures are experiencing change, as crypto companies such as Circle and BitGo advocate for bank charters. Easing regulations indicate a trajectory toward financial mainstream integration.
Traditional financial institutions, such as Circle and BitGo, advocate for bank charters as regulatory environment softens. Indications point towards increased integration with mainstream finance.
Traditional crypto companies such as Circle and BitGo advocate for bank charters due to securer regulatory conditions. There's a growing trend towards conventional financial system incorporation.
Traditional crypto businesses such as Circle and BitGo advocate for bank charters, bolstered by regulatory adjustments that signal a move towards financial mainstreaming and integration.
Traditional crypto entities such as Circle and BitGo advocate for bank charters, as legislative adjustments foster a path toward traditional financial system assimilation. The wind appears to be shifting towards broader financial incorporation.
Traditional crypto companies such as Circle and BitGo propose banking charters due to easing regulatory reforms, signifying a shift towards seamless integration with conventional finance systems.
Traditional financial institutions like Circle and BitGo advocate for bank charters due to pending regulatory relaxations, hinting at a transition toward conventional banking integrations.

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