Banks Enter the Cryptocurrency Market USA As Federal Oversight Sparks a New Era Of Digital Trading

The ongoing change is not a quick one, but it is surely one that is transforming the US financial industry. Banks regulated federally are now entering the crypto market, which was basically the domain of entice and startups. SoFi Bank has set a milestone as the very first bank with FDIC insurance, federally chartered, and allowed to engage in trading crypto with retail investors. Such a step has put SoFi in a fortunate position under the regulation of the OCC (Office of the Comptroller of the Currency). The bank’s app allows customers to transact, store, and get hold of digital asset classes such as Bitcoin, Ether, and Solana directlyThe 2020 guidance by the OCC authorises national banks to take custody, settle, and trade digital assets only under strict risk, capital, and anti-money-laundering parameters. The new platform of SoFi is, in fact, a great stepping stone to the guidance issued by the OCC, as SoFi makes crypto available to retail customers. It combines insured fiat accounts with direct access to digital assets, thereby providing security and compliance. The trend could encourage banks under federal supervision to challenge existing crypto exchanges significantly. Nevertheless, banks bear the burden of high compliance costs as well as the upkeep of strong liquidity, disclosure, and audit systems just as they do in the securities and commodities markets.Federal regulation offers tight control, which many offshore exchanges do not have. Investors may feel more trust in using platforms backed by banks, with the regulators checking the liquidity and the transparency. This trend is part of a broad strategy from Washington aiming at making crypto trading operate under the same rules as traditional finance. The entry of banks might, thus, be a factor in reducing the long-standing gap between regulated banking and decentralised finance, leading to a more mature and stable market.Europe is giving an insight into future developments. Revolut Bank, which is based in the UK, started to introduce in-app trading of cryptocurrencies in 2017 and was granted a full EU banking license in 2021 through the central bank of Lithuania. Other platforms like Revolut, N26, and Monzo are now functioning all over Europe under e-money and MiCA regulations. The European model demonstrates that a successful and supervised approach to crypto integration in banking is possible, thus providing a path for US regulators and banks to follow.

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