As some banks propose issuing their own digital assets and some cryptocurrency companies consider seeking for banking licenses, the Trump 2.0 age is creating new crossovers in the financial sector.
The convergence is accelerating as the new government relaxes regulations on both traditional banking behemoths and cryptocurrency activities.
The most recent proof of this mashup comes from a Wall Street Journal story that states cryptocurrency upstarts Circle, BitGo, Coinbase Global (COIN), and Paxos are all thinking about or intending to apply for a US bank license in one way or another.
A Coinbase representative informed Yahoo Finance that while Coinbase is actively examining this, the company has not yet made any official decisions.
In the meanwhile, as Congress considers new rules governing those digital assets, Bank of America (BAC) has stated that it is open to establishing its own stable cryptocurrency. Most frequently, the US dollar is used as the benchmark for stablecoins.
“We will enter that business if they make that legal,” Brian Moynihan of Bank of America stated in February. In the country, Bank of America is the second-biggest lender.
Other conventional banks and payment companies, such as Standard Chartered, PayPal (PYPL), and Stripe, are either experimenting with or thinking about getting more involved with stablecoins. It is reported that Fidelity Investments, a major player in money management, has also started testing its own stablecoin.
BitGo CEO Mike Belshe told, “Some of the traditional banks are going to embrace and start offering crypto-related products directly.” Additionally, cryptocurrency will be trending more toward traditional finance, with firms like BitGo providing more conventional services.
Last week, the Federal Reserve removed instructions warning bankers against dabbling in cryptocurrency, marking the latest step the Trump administration has taken to remove barriers between the banking and cryptocurrency industries.
One outcome is that lenders are no longer need to obtain the Fed’s prior clearance before engaging in crypto-related operations.
Since lawmakers are considering legislation that will likely require stablecoin issuers to have charters or licenses, the Trump administration’s goal for this year’s stablecoin regulatory framework may be encouraging some cryptocurrency companies to apply for banking licenses.
Circle’s chief strategy officer, Dante Disparte, stated in a post on X last week that the company has no plans to become a bank or any other type of insured depository institution. In order to adhere to a future regulatory framework for payment stablecoins in the United States, they do plan to file for a federal or state trust charter or other nonbank license.
As per a report, bank charters may also provide cryptocurrency companies with a means of gaining credibility and mitigating the risk of legislation being postponed by Washington.
According to Daniel Hartman, a former legal counsel at the Federal Reserve Bank of Boston and a financial sector specialist at the law firm Nutter, “A bank charter is a privilege,” he told Yahoo Finance. Credibility is greatly increased by being accepted into that system, Hartman continued.
More crypto-focused banking has been a niche endeavor for certain institutions in recent years. For a while, the decision paid off because of the rise in popularity of digital assets like bitcoin during the pandemic.
Finally, the shift was halted in the wake of the bankruptcy of cryptocurrency-friendly lenders Silvergate and Signature Bank in 2023 and the failure of cryptocurrency exchange FTX in 2022. In the eyes of authorities, that sequence of events created a sort of taboo for lenders wishing to use a similar tactic.
However, in the Trump age, that taboo is eroding as a wave of fintech companies and lenders aim to gain a piece of the cryptocurrency market, especially stablecoins.
Patrick Collison, the CEO of Stripe, stated in a post on X last Friday that “we’ve wanted to build this product for around a decade, and it’s now happening.”
In February, the fintech company purchased Bridge, a stablecoin platform, and is already testing stablecoin payment products for businesses outside of the US, UK, and EU.
The largest financial company to date to create a stablecoin, PayPal, this week revealed intentions to give users who hold its stablecoin (PYUSD) on its payments app Venmo an annual yield of 3.7%. Additionally, Coinbase has eliminated fees for anyone wishing to purchase or sell the commodity on its platform.
The second-largest stablecoin in the world, USDC, is issued by Circle. The company also revealed that several institutions, including Standard Chartered, Santander, and Deutsche Bank, are offering advice to it on creating a new cross-border payments network that would compete with SWIFT.
Additionally, last month, BitGo and World Liberty Financial, a new cryptocurrency business supported by President Trump and his sons, announced intentions to manufacture their own stablecoin that is tethered to the US dollar.
“If you asked anybody six months ago, nobody really would have thought we would be getting here, but now we’re here,” Belshe, CEO of BitGo, remarked in reference to the rapid blending of Wall Street and cryptocurrency following Trump’s electorate win.
