According to The Wall Street Journal, the Trump administration recently approved five companies to establish national trust banks for cryptocurrency services, a move echoed by other federal regulators in 2024. This formal banking entry coincides with a glaring lack of comprehensive federal crypto legislation since Bitcoin’s 2009 debut. Congress only “nibbled” in 2025 with the Genius Act for stablecoins, while the broader Clarity Act remains mired in details. The article starkly highlights crypto’s use in crimes like money laundering and terrorism, citing the Binance case against former CEO Changpeng Zhao. The core argument is that inviting banks into this “digital Wild West” without solving its fundamental regulatory problems creates dangerous systemic risks for the entire economy.
The regulatory absurdity
Here’s the thing that just boggles the mind. We have incredibly strict anti-money laundering (AML) laws for traditional finance. Banks can get in huge trouble for not knowing about suspicious activity. But now, with actions from the OCC and the Federal Reserve, we’re telling these same banks it’s okay to custody and manage crypto assets. Assets that, as the author puts it, seem “born to facilitate crime” due to their pseudo-anonymous nature. It’s a massive inconsistency. The FDIC’s stablecoin guidance is a step, but it’s a tiny piece of a huge, unstable puzzle. So we’re basically asking banks to build a vault door but leaving the back wall of the building wide open.
Beyond crime, the systemic risk
Everyone focuses on the crime angle, and it’s a valid nightmare. But the bigger, scarier picture is about trust and contagion. The article nails it: these are “hope certificates with no intrinsic value.” When—not if—the next major crypto collapse happens, and it involves a bank that’s now deeply intertwined, what then? The crisis of confidence won’t stop at the crypto firm. It will splash onto the bank’s balance sheet, its reputation, and its traditional depositors. We saw a mini-version of this with Silvergate and Signature. The fear is a full-blown “Sam Bankman-Fried” event that’s been given a banking license and a veneer of legitimacy first. That puts the whole system in jeopardy.
What real regulation looks like
The solution proposed isn’t novel, but it’s painfully clear. Not just disclosure rules. Not just stablecoin tweaks. Comprehensive regulation that treats crypto like the financial service it claims to be. That means licensing executives with proven experience and integrity. It means applying the same AML and know-your-customer (KYC) frameworks, but adapted for the blockchain era. It means having clear capital requirements and consumer protections. Basically, if you want the privilege of touching the mainstream financial system—through banks or payments—you have to play by its core rules. Until that happens, every bank getting into crypto is taking a gamble not just with its own money, but with public trust in the entire financial architecture. And that’s a bet we can’t afford to lose.
