Banking Can Work With Crypto, But Crypto-Banking Does Not Work

The securities and banking regulators are enforcing existing rules and clarifying the permissible interactions between the financial services industry and cryptocurrency. This is a positive development for the evolution of the digital asset-class, but the regulatory actions are making some market participants very nervous.

There are firms wanting to start “crypto-banks”, and are seeking to merge cryptocurrency into the banking system. In the face of regulatory pushback one argument used in support of their ideas is that if change does not happen quickly the U.S. will fall behind other countries in embracing the benefits of crypto-innovation. Cryptocurrency proponents decry the caution expressed by the guardians of the U.S. banking system, and want to see far greater interaction between banks and the new crypto-first companies. There are some participants, like Binance, that operate globally and without a primary regulator, who seek to change banking in the U.S. and abroad.