The crypto world has gotten some early Christmas presents. The Securities and Exchange Commission has dismissed some Biden-era lawsuits, and the industry has helped push through landmark stablecoin legislation. Crypto companies have also made strides on a lingering problem: access to the mainstream financial system. But that is still a bottleneck for the industry. First, the wins. This month, Circle and Ripple were among five crypto firms that won national trust charters from a federal banking regulator. Texas billionaire banker Andy Beal is shifting the focus of one of the banks he owns to crypto. And Erebor Bank, backed by Peter Thiel and Anduril co-founder Palmer Luckey, plans to open its door to clients including crypto firms as soon as late January—and will have another $350 million in VC funding to expand, Axios reported. Even the Federal Reserve may open up access to its payment system to crypto firms.
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The crypto world has gotten some early Christmas presents. The Securities and Exchange Commission has dismissed some Biden-era lawsuits, and the industry has helped push through landmark stablecoin legislation. Crypto companies have also made strides on a lingering problem: access to the mainstream financial system. But that is still a bottleneck for the industry.
First, the wins. This month, Circle and Ripple were among five crypto firms that won national trust charters from a federal banking regulator. Texas billionaire banker Andy Beal is shifting the focus of one of the banks he owns to crypto. And Erebor Bank, backed by Peter Thiel and Anduril co-founder Palmer Luckey, plans to open its door to clients including crypto firms as soon as late January—and will have another $350 million in VC funding to expand, Axios reported. Even the Federal Reserve may open up access to its payment system to crypto firms.
This is a big improvement from 2023, when the crypto industry’s main banks—Silicon Valley Bank, Signature Bank and Silvergate Bank—shuttered, preventing some crypto exchanges from moving cash onto their apps.Still, the ties between crypto platforms and banks—where most people still keep their money—remain tenuous. National trust charters generally allow crypto firms to provide digital-asset custody and related services that can support customer trading, and in some cases to hold stablecoin reserves, but they do not allow firms to take deposits or make loans. That means crypto firms still need to connect to a traditional, full-service bank.
Sources tell us many crypto startups still struggle to get and maintain bank accounts, which is critical for their operations. A new crop of startups like Stripe’s Bridge and BVNK have popped up to use stablecoins as a quick and low-fee way to move money across borders. They need traditional banks to receive and store their users’ money, which they then convert into stablecoins.
Too many of them are relying on Lead Bank, a small, tech-forward bank based in Kansas City, because it’s one of the few banks willing to take them on. That reliance could be a problem because the bank has been tightening risk controls and curtailing services for stablecoin clients in some countries and sectors, we reported last week.
Lead Bank’s moves are especially notable as the Trump administration has taken a hands-off approach to crypto firms. It shows that even as Trump discourages regulators from actions such as refusing services to crypto companies, banks themselves are still cautious about welcoming crypto clients. To really fix crypto’s banking problem, more banks—and bigger ones—beyond the handful of small, new banks have to step up.
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