From their inception as a relatively niche technological development, crypto and DeFi products have come to play a significant role in the financial ecosystem. Their recent rise in popularity begs an important question about their potential. Across countries, higher innovation capacity, more advanced economic development, and greater financial inclusion are associated with a higher likelihood of banks taking on cryptocurrency operations.
The US Congress can continue to allow bank regulators to make the key decisions when it comes to financial institutions crossing sectors, or it can set detailed rules itself. According to the Congressional Research Service, the legislative branch wishes for a more durable approach to limit or expand bank involvement in crypto, introducing bills to better regulate the use of stablecoins.
Stablecoins are transitioning from P2P use to mainstream B2B and B2C payments, disrupting traditional bank-owned systems. As adoption grows, so does the risk of disintermediating existing financial systems. A clear federal framework could enable banks to harness stablecoins for faster, more secure transactions. With rising demand and offerings, stablecoins may soon redefine the traditional payment value chain.
But this trend also flows in the opposite direction, with a growing number of crypto firms pursuing banking licences to integrate deeply into the TradFi space and reduce reliance on third-party banks. Driven by clearer regulations and evolving stablecoin frameworks, these firms aim to bridge the gap between digital assets and conventional banking. Although the licencing process demands rigorous compliance, capital reserves, and ongoing audits, it ultimately positions crypto firms to offer more secure, regulated services and potentially reshape the future of finance.
When we reached out for a comment, James Butland, the CBO of KAST, a fintech platform offering stablecoin-based financial services, said that ‘up to 2024, the worlds of TradFi and crypto have operated in parallel rather than a cohesive ecosystem. Crypto had been seen historically as a speculative instrument with no real-world utility.
In the past 12 months, we’ve seen a maturing of this view of Crypto and its structural benefits in the role of global finance. The rapid growth of stablecoins reaching a market cap of >USD 230 billion in April following 19 consecutive months of growth highlights the demand for this product from the global community.
How banks and TradFi interact with this new way of moving money has been unstructured to date with a small (relative) number of financial institutions supporting companies and consumers in this sector. At KAST, we have since the real world need for consumers to use their digital assets and also to access stable currency rails in parts of the world where volatility prevails.
The two sectors have started to realise the benefits of each part of the ecosystem, traditional banks seeing how the world is changing, in real time and how 50 year legacy infrastructure (i.e. SWIFT, national segregated payment systems) cannot compete with an increasingly mobile and sophisticated global citizen, where those in the crypto space see the benefits of local connectivity and the first/last leg. The two payment systems are not separate and together represent a holistic way of moving money quickly, transparently and at low costs. As the world continues to grow and money movement continues to grow exponentially, the two systems will converge into one, to the benefit of the end user.’
The rapid adoption of crypto led to increased banking needs and opened business opportunities. Banks are considering a more active role in offering crypto-related services, beyond traditional offerings like lending and deposit-taking. Traditional institutions now have the opportunity to provide their own crypto services, such as payment applications and tokenisation, and seek to gain crypto licences.
Easing regulations in the US, such as the national strategic crypto reserve proposal, led banks like Standard Chartered and Deutsche Bank to explore jumping markets and start operating with cryptocurrencies. This highlights the changing landscape in the US as the industry continues to develop.
Meanwhile, crypto firms are seeking to enter the TradFi market. Several cryptocurrency firms, including Circle, BitGo, Coinbase, Paxos and Wirex applied for banking charters with the Office of the Comptroller of the Currency (OCC) in the US. Currently, Anchorage Digital is the only US-based crypto exchange with a banking licence. It gained the charter in 2021, undergoing a thorough regulatory process and incurring millions of dollars in costs, and now operates as a traditional bank, while subject to stricter regulations.
However, Wirex aims to expand its services with the launch of its banking platform, Wirex Business. The platform responds to the growing demand from Web3 enterprises for financial services that mirror traditional business banking, particularly in areas such as treasury operations, payroll processing, and global payments, while remaining compatible with decentralised finance principles.
These initiatives come as the US is working to reshape its regulatory stance on stablecoins. For crypto firms, obtaining a bank charter could mean offering a wider set of financial services, such as taking deposits and lending, and gaining increased legitimacy and consumer trust. Additionally, charters offer a way to the Federal Reserve’s master accounts, granting direct access to the central bank’s payment infrastructure, typically reserved for federally regulated depository institutions.
Recent research from bunq underlines a significant gap in the crypto market, with 65% of European global citizens looking for a single platform to manage their banking, savings, and crypto investments. Approximately 50% of those surveyed expressed their desire to invest in crypto, however, they claim that existing platforms do not meet their needs.
bunq aims to tackle this challenge by crossing into both banking and crypto, filing for a broker-dealer licence with FIRA and SEC to enter the US market. The move aims to allow the company to collect operational insights and user feedback before reapplying for a full banking licence later in 2025. What’s more, the fintech’s users will be able to invest in stocks, mutual funds, and ETFs while also benefiting from cash management capabilities, including automatic transfers to FDIC-insured accounts.
The neobank also launched bunq Crypto, a feature that enables users to invest in the market and gain access to over 300 cryptocurrencies, including Bitcoin, Ethereum, and Solana. The company aims to offer a simple and transparent method to invest while mitigating the complexities that come with TradFi platforms.
Following this trend, Stripe applied for and received approval for a Merchant Acquirer Limited Purpose Bank (MALPB) licence from Georgia’s Department of Banking and Finance. The charter supports Stripe’s goal of gaining access to payment card networks. After a six-year hiatus from offering crypto-related services, Stripe also built a new USD-pegged stablecoin designed for companies based outside the US, the UK, and Europe. As stablecoins in the US have increasingly gained traction at the federal level, the move reflects Stripe’s renewed commitment to digital assets. This comes shortly after Stripe’s acquisition of Bridge, a stablecoin payments network.
Stripe’s launch of a new stablecoin highlights how these assets are increasingly positioned to bridge traditional payment rails with DeFi infrastructure, enabling faster, simpler global transactions.
Stablecoin transactions have grown to reach over USD 200 billion, allowing for instant settlement at reduced costs across borders and entities. They incentivise users to transition from TradFi systems to blockchain networks, all while avoiding the volatility associated with non-fiat-backed cryptocurrencies.
Stablecoin payments can potentially reduce cross-border transaction fee costs, increase speed, and offer a wider set of payment methods with more transparency. Combined, these aspects may improve accessibility and bank flexibility, reducing the need for layers of oversight, lowering the number of intermediaries, and combining various processes of a transaction into a single action.
However, compared to already existing regulated options for traditional financial assets, the supervisory oversight of crypto, which encompasses consumer protection, market integrity, and AML, CFT and KYC regulations, remains incomplete. Risks of utilising stablecoins for international transactions include challenges in organisational structure, any inconsistencies in access to on- and off-ramps, and a lack of regulatory consistency across jurisdictions. Many of these challenges may undermine user trust in stablecoins as a form of private money, which may deter widespread adoption.
While crypto may be challenging for fintechs, the risks are greater for banks. The 2023 failure of FTX and the liquidation of Signature and Silvergate, which experienced losses due to their involvement with crypto clients, contributed to a shift in regulatory approach, minimising banks’ ability to engage in crypto. The FTX bankruptcy reflected how even the largest participants in the space often lack the internal controls expected of traditional financial institutions.
President Trump reversed Biden-era restrictions, issuing a new order which outlines his policy to support the responsible growth and use of digital assets, blockchain technology, and related services across all sectors of the economy. Trump also dissolved the NCET within the Department of Justice and halted the SEC’s lawsuit against Coinbase, easing regulatory pressure and encouraging stablecoin adoption.
In March 2025, OCC overturned its Interpretive Letter 1179, which required banks to get permission before engaging in crypto activities. Around the same time, Congress introduced three bills to regulate payment stablecoins: the GENIUS Act, the Stablecoin Transparency and Accountability for Better Ledger Economy (STABLE) Act, and an unnamed bill. These measures aim to create federal rules for stablecoin issuance, reserve backing, and oversight, with input from the Treasury and Federal Reserve. This increases the likelihood of stablecoin legislation being enacted, which is expected to drive more fintechs and banks to adopt them in business operations.
The administration’s stated support for USD-backed stablecoins, forthcoming legislation promising greater regulatory clarity, and early signs of market adoption, including banks exploring issuance and increased venture activity, signal growing momentum. Whether through banks entering the crypto space or crypto firms integrating with TradFi, the financial landscape is being reshaped in real time.As the boundaries between crypto and TradFi continue to blur, stablecoins, banking licences, and ever-evolving regulations shape a new financial ecosystem, where innovation must be balanced with oversight.
Aurora is a Junior News Editor at The Paypers. She is passionate about how finance impacts individuals, shapes economic trends, and drives innovation through fintech. With a keen interest in financial inclusion and behavioural finance, she explores the intersection of technology and financial empowerment.
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