The Trump 2.0 era is producing new crossovers in the financial world as some crypto firms consider applying for banking licenses and some banks consider issuing their own digital assets.
The convergence is picking up momentum as the new administration loosens restrictions on both crypto operations and traditional banking giants.
The latest evidence of this mashup is that crypto upstarts Circle, BitGo, Coinbase Global (COIN), and Paxos are all either considering or planning to seek a US bank license in some form, according to a report in the Wall Street Journal.
“This is something Coinbase is actively considering but has not made any formal decisions yet,” a Coinbase spokesperson told Yahoo Finance.
At the same time, Bank of America (BAC) has indicated it is open to issuing its own stablecoin as Congress weighs new legislation governing those digital assets. Stablecoins are pegged to other assets, most often the US dollar.
“If they make that legal, we will go into that business,” Bank of America’s Brian Moynihan said in February. Bank of America is the nation’s second-largest lender.
Other traditional banks and payments providers are also testing or considering a deeper involvement with stablecoins, from Standard Chartered to PayPal (PYPL) to Stripe. Money management giant Fidelity Investments has also begun testing its own stablecoin, according to the Financial Times.
“Some of the traditional banks, they’re going to embrace and start offering crypto-related products directly,” BitGo CEO Mike Belshe told Yahoo Finance. “We’re also going to see crypto moving more towards traditional finance as well, which is crypto companies like BitGo offering more traditional services.”
The latest barrier between the bank and crypto worlds that was lifted by the Trump administration came last week when the Federal Reserve rescinded guidance cautioning lenders from dabbling in crypto.
One result is that lenders no longer need to seek advance approval from the Fed before moving forward in crypto-related activities.
The stablecoin regulatory framework that the Trump administration wants Congress to pass this year may be motivating some crypto firms to seek banking licenses, since the legislation being considered by lawmakers would likely require stablecoin issuers to have charters or licenses.
“Circle does not intend to become a bank or any other kind of an insured depository institution,” Dante Disparte, Circle’s chief strategy officer said in a post on X last week. “We do intend to comply with a future U.S. regulatory framework for payment stablecoins, which may require registering for a federal or state trust charter or other nonbank license.”
Bank charters might also offer crypto firms a way to hedge the chance that legislation is delayed by D.C. and gain legitimacy, according to a Bloomberg report.
“A bank charter is a privilege,” Daniel Hartman, a financial sector-focused attorney for law firm Nutter and former legal counsel at the Federal Reserve Bank of Boston, told Yahoo Finance. “Getting welcomed into that system adds an immense amount of credibility,” Hartman added.
In recent years, some banks have aimed to offer more crypto-targeted banking as a niche undertaking. The move proved lucrative for a time as bitcoin and other digital assets began to grow in popularity during the pandemic.
Ultimately, the move was thwarted in the aftermath of the 2022 collapse of crypto exchange FTX and the 2023 collapse of crypto-friendly lenders Silvergate and Signature Bank. That series of events posed something of a taboo in the eyes of regulators for lenders looking to try a similar strategy.
But that taboo is falling away in the new Trump era as a flurry of fintech firms and lenders look to take some share in the crypto market, particularly stablecoins.
“We’ve wanted to build this product for around a decade, and it’s now happening,” Stripe CEO Patrick Collison said in a post on X last Friday.
The fintech firm acquired stablecoin platform Bridge in February and is now testing stablecoin payments products for companies based outside the US, UK, and European Union.
PayPal, the largest fintech firm to issue a stablecoin so far, last week announced plans to offer users a 3.7% annual yield for holding its stablecoin (PYUSD) on its payments app Venmo. Coinbase also recently waived fees for users looking to buy or sell the asset on its platform.
Circle, issuer of the world’s second-largest stablecoin (USDC), also announced that a number of banks, including Deutsche Bank, Santander, and Standard Chartered, are advising it on designing a new cross-border payments network billed as a SWIFT competitor.
And last month, World Liberty Financial, a new crypto startup backed by President Trump and his sons, unveiled plans to mint its own US-dollar-pegged stablecoin in partnership with BitGo.
“If you asked anybody six months ago, nobody really would have thought we would be getting here, but now we’re here,” Belshe, BitGo’s CEO, said when speaking about how quickly crypto and Wall Street have begun to intermingle since Trump’s election victory.
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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