US banks may soon have broader access to crypto services under the Trump administration. The Federal Deposit Insurance Corporation (FDIC) is planning to revise banking regulations to allow banks to engage in certain crypto activities, such as custody services and “tokenized deposits,” without prior regulatory approval, as reported by Barron’s.
During the previous major crypto market crash, regulators ensured that major banks had minimal exposure to Bitcoin and other digital assets, which protected them from financial repercussions. However, this situation could change in the near future.
After facing regulatory obstacles during the Biden administration, banks could soon receive approval from former President Donald Trump and his team to integrate crypto services. Trump, who has launched his own digital token, seems to be forming a pro-crypto government, potentially enabling traditional financial institutions to compete with industry leaders like Coinbase Global, Robinhood Markets, and BlackRock.
The FDIC’s planned revisions aim to relax restrictions that previously required banks to obtain regulatory approval before entering the crypto market. Some financial institutions have already initiated discussions with policymakers to advocate for offering crypto asset custody and integrating blockchain-based tokenized deposits, as per individuals familiar with the matter.
Bank of America CEO Brian Moynihan has shown strong interest in this development, stating to CNBC at the World Economic Forum in Davos, Switzerland, that banks would embrace the opportunity if there was regulatory clarity.
Currently, banks have limited involvement in the crypto space. Expanding their role to include a wider range of services, such as depositing on blockchains, would be a significant departure from the policies of the Biden era. The previous administration actively discouraged banks from having connections with crypto, citing concerns about illicit activities and risks to financial stability.
*This is not investment advice.