We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
US Financial Firms Mull Over Crypto Expansion, Seek Regulatory Clarity
Read MoreHide Full Article
As the Donald Trump administration began its second term in January, it opened the doors for many U.S. financial firms to venture into crypto asset-related activities, given the favorable stance of the administration towards cryptocurrency.
Nonetheless, despite strong endorsements from regulators, large financial firms like Bank of America (BAC - Free Report) , Morgan Stanley (MS - Free Report) , and Charles Schwab (SCHW - Free Report) remain cautious regarding crypto expansion. Thus, initial steps are likely to be tentative with small pilot programs, collaborations and modest crypto trading.
Earlier this month, Paul Atkins, chair of the Securities and Exchange Commission (SEC), stated his plans to overhaul cryptocurrency policies and establish guidelines for the distribution of crypto tokens that are securities, and consider whether additional exemptions are requisite.
Further, the US Office of the Comptroller of the Currency (OCC) allowed U.S. banks to manage crypto assets on behalf of their clients. The OCC confirmed that banks can buy, sell, and hold crypto in custody, alongside outsourcing certain services, such as custody and execution, to third parties.
In April 2025, the Federal Deposit Insurance Corporation (FDIC) and the Board of Governors of the Federal Reserve System withdrew two joint statements that required U.S. banks to issue an advance notification concerning any crypto or stablecoin activities.
In March 2025, the FDIC clarified that FDIC-supervised institutions can engage in permissible crypto-related activities without receiving prior approval. Further, Donald Trump signed an executive order to establish a strategic crypto reserve.
In January 2025, the SEC rescinded an accounting rule that previously required banks to recognize a liability and corresponding asset for their obligation to safeguard crypto assets.
Crypto Ventures by Financial Firms
Most firms are likely to enter into custody businesses by forming alliances with existing crypto firms. If a major firm expands without any hurdles, others will likely follow in terms of running small-scale projects and considering other business prospects.
Rick Wurster, CEO of Charles Schwab, told Reuters earlier this month that the signals from financial regulators were quite favorable for large firms to expand in the crypto space.
Further, on the first-quarter 2025 earnings call, Wurster stated that Schwab will likely launch spot cryptocurrency trading services in the next 12 months. The company already allows its clients to trade spot Bitcoin ETFs after they started trading last year. Similarly, Morgan Stanley is also planning to build a crypto trading feature for E*Trade, with a target to launch spot trading next year.
Also, Bank of America is considering launching stablecoins, as stated by CEO Brian Moynihan earlier this year, if the regulations allow. Further, the company along with a few other large banks is exploring issuing a joint stablecoin, with the discussions being in earlier stages at the moment.
Though these regulatory endorsements are welcoming, U.S. financial firms are seeking greater clarification from the administration on what they can do in crypto and surrounding anti-money laundering (AML) rules.
The firms don’t want to get caught up in the rapidly evolving regulatory landscape and, therefore, are seeking well-defined guidelines before entering into the crypto space.
While custody businesses to store and manage digital assets seem promising, they offer thin margins relative to higher potential risks. This makes large firms apprehensive about pursuing a large-scale expansion into the crypto custody business.
The rules for traditional banking businesses are very well defined, and there is complete clarity over what a bank is allowed to do and what is outside its scope. Similar well-defined guidelines are required for digital assets as well to persuade large financial firms to expand more aggressively into the crypto domain.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
US Financial Firms Mull Over Crypto Expansion, Seek Regulatory Clarity
As the Donald Trump administration began its second term in January, it opened the doors for many U.S. financial firms to venture into crypto asset-related activities, given the favorable stance of the administration towards cryptocurrency.
Nonetheless, despite strong endorsements from regulators, large financial firms like Bank of America (BAC - Free Report) , Morgan Stanley (MS - Free Report) , and Charles Schwab (SCHW - Free Report) remain cautious regarding crypto expansion. Thus, initial steps are likely to be tentative with small pilot programs, collaborations and modest crypto trading.
Recent Regulatory Developments Regarding Crypto-Based Activities
Earlier this month, Paul Atkins, chair of the Securities and Exchange Commission (SEC), stated his plans to overhaul cryptocurrency policies and establish guidelines for the distribution of crypto tokens that are securities, and consider whether additional exemptions are requisite.
Further, the US Office of the Comptroller of the Currency (OCC) allowed U.S. banks to manage crypto assets on behalf of their clients. The OCC confirmed that banks can buy, sell, and hold crypto in custody, alongside outsourcing certain services, such as custody and execution, to third parties.
In April 2025, the Federal Deposit Insurance Corporation (FDIC) and the Board of Governors of the Federal Reserve System withdrew two joint statements that required U.S. banks to issue an advance notification concerning any crypto or stablecoin activities.
In March 2025, the FDIC clarified that FDIC-supervised institutions can engage in permissible crypto-related activities without receiving prior approval. Further, Donald Trump signed an executive order to establish a strategic crypto reserve.
In January 2025, the SEC rescinded an accounting rule that previously required banks to recognize a liability and corresponding asset for their obligation to safeguard crypto assets.
Crypto Ventures by Financial Firms
Most firms are likely to enter into custody businesses by forming alliances with existing crypto firms. If a major firm expands without any hurdles, others will likely follow in terms of running small-scale projects and considering other business prospects.
Rick Wurster, CEO of Charles Schwab, told Reuters earlier this month that the signals from financial regulators were quite favorable for large firms to expand in the crypto space.
Further, on the first-quarter 2025 earnings call, Wurster stated that Schwab will likely launch spot cryptocurrency trading services in the next 12 months. The company already allows its clients to trade spot Bitcoin ETFs after they started trading last year. Similarly, Morgan Stanley is also planning to build a crypto trading feature for E*Trade, with a target to launch spot trading next year.
Also, Bank of America is considering launching stablecoins, as stated by CEO Brian Moynihan earlier this year, if the regulations allow. Further, the company along with a few other large banks is exploring issuing a joint stablecoin, with the discussions being in earlier stages at the moment.
Why Financial Firms Remain Cautious Despite Regulatory Support?
Though these regulatory endorsements are welcoming, U.S. financial firms are seeking greater clarification from the administration on what they can do in crypto and surrounding anti-money laundering (AML) rules.
The firms don’t want to get caught up in the rapidly evolving regulatory landscape and, therefore, are seeking well-defined guidelines before entering into the crypto space.
While custody businesses to store and manage digital assets seem promising, they offer thin margins relative to higher potential risks. This makes large firms apprehensive about pursuing a large-scale expansion into the crypto custody business.
The rules for traditional banking businesses are very well defined, and there is complete clarity over what a bank is allowed to do and what is outside its scope. Similar well-defined guidelines are required for digital assets as well to persuade large financial firms to expand more aggressively into the crypto domain.