Cryptocurrency companies in the U.S. are pursuing bank licenses and preparing for stablecoin regulations. Notable firms include BitGo, Circle, Coinbase, and Paxos, focusing on compliance and lobbying amid two legislative initiatives: the STABLE Act and the GENIUS Act. These developments signal a shift towards broader acceptance and regulation of crypto in the U.S. financial system.
In the United States, cryptocurrency firms such as Circle, BitGo, Coinbase, and Paxos are actively pursuing banking licenses to integrate more closely with traditional financial systems. BitGo is applying for a full banking charter, enabling services such as deposits and loans. Additionally, BitGo manages the reserves for USD1, a stablecoin supported by World Liberty Financial and certain members of the Trump family.
Circle is increasing its lobbying efforts amid the tension from major banks like Bank of America, which is pushing for legislation that may favour traditional banks over nonbank stablecoin issuers. Bank of America itself has shown interest in launching a stablecoin, contingent on regulatory changes.
Currently, two significant bills regarding stablecoin regulation are advancing. The STABLE Act has progressed through the House Financial Services Committee, advocating for federal oversight, separating reserve funds from company assets, and imposing a two-year prohibition on specific algorithmic stablecoins. Concurrently, the GENIUS Act in the Senate proposes both federal and state regulatory frameworks, mandating stablecoin issuers comply with Anti-Money Laundering regulations and liquidity requirements, while categorising them as financial institutions under the Bank Secrecy Act.
Under President Trump’s administration, the U.S. government appears to be more welcoming towards cryptocurrency companies. Restrictions previously limiting crypto engagement for banks are easing, and the Federal Reserve intends to release guidance on crypto banking activities. Jerome Powell, Fed Chair, supports establishing clear legal frameworks for stablecoins, noting their increasing role in the economy.
Currently, Anchorage Digital is the sole crypto firm with a federal bank charter, primarily serving institutional clients and engaging in lending activities, including a significant $2 billion Bitcoin-backed loan involving Cantor Fitzgerald and Copper. However, the firm is under scrutiny by the Department of Homeland Security.
While some traditional banks such as U.S. Bancorp and Bank of America are forming partnerships to develop crypto services, others display caution. International entities, including Deutsche Bank and Standard Chartered, are closely monitoring the situation as they evaluate potential entry into the U.S. cryptocurrency market.
Stablecoins, especially Tether and Circle’s USD Coin, are pivotal in the crypto landscape, facilitating a wide array of payments and trading activities. As regulatory measures evolve, cryptocurrency companies are gearing up to meet more stringent standards, aiming to secure enhanced integration within the financial system.
