Is the crypto boom here to stay?

Traditional financial institutions that fail to capitalise on crypto are at risk of missing out, write Melissa Wisner and David Carlisle

Public interest in cryptocurrency among Americans has surged in recent years. One survey estimates that, as of 2025, approximately 28% of US adults – around 65.7 million people – own cryptocurrency, up from 15% in 2021. Forty-two percent of respondents indicated that they are somewhat likely or very likely to buy cryptocurrency in the next year. The size of business opportunities associated with crypto are also on the rise: in 2024, the global cryptocurrency market was valued at $2.1 trillion, and is projected to reach $5 trillion in 2030. Analysts expect the stablecoin market to quintuple over the next five years, reaching as high as nearly $4 trillion.

Today, there is no question that financial institutions recognise the value of digital assets, especially crypto. According to Elliptic’s 2025 State of Crypto, 77% of compliance and risk leaders see a compelling business case to progress their next digital asset strategy. Seventy six percent of those surveyed reported that they must advance their digital asset objectives within the next two years or fall behind. Digital assets are not currently mainstream, but they may be soon – especially with the Trump Administration’s pro-crypto shift and appetite for crypto-related legislation on Capitol Hill. Banks, too, are more optimistic about investing in crypto than ever before. All of which begs the question: is this the year that traditional finance (TradFi) will fully embrace decentralised finance (DeFi)?

Steering clear of crypto

For sound risk management reasons, banks historically avoided engagement with cryptocurrencies and blockchain technologies (until recently). When Satoshi Nakamoto published the Bitcoin White Paper in 2008, bitcoin was largely perceived as an experimental, anarchic challenge to the dominance of traditional financial institutions. In the years that followed, cryptocurrencies became notorious for their association with illicit activities, including sanctions evasion, drug trafficking and laundering the proceeds of fraud, most prominently exemplified by platforms like the Silk Road. Recognising the heightened financial risks and the potential for regulatory scrutiny, many banks distanced themselves from the high-risk, emerging crypto sector.

During the late 2010s and early 2020s, the crypto industry experienced significant volatility characterised by rapid booms and busts, as well as high-profile failures like the collapse of the FTX crypto exchange run by Sam Bankman-Fried. While these growing pains represented challenges to the sector overall, they collectively shaped the maturation of the industry, fostering a more risk-conscious environment and drawing greater scrutiny and demands for accountability from regulators and policymakers. This shift to a more mature, regulation-conscious environment has made the cryptoasset space increasingly attractive to conservative financial institutions.

Even if banks to date had possessed greater confidence in their ability to manage crypto-related risks (which they largely did not) traditional financial institutions, by design, are not structured to ‘move fast and break things’ like FinTechs and crypto start-ups. In the aftermath of various financial crises, escalating regulatory requirements and the substantial financial and reputational costs associated with regulatory enforcement actions, banks over the past decade and half have instituted multiple layers of bureaucracy and governance to ensure that any new product, service or feature would undergo rigorous review, approval and ongoing oversight. Furthermore, when investment or risk management decisions go wrong at a bank, both regulators and shareholders hold the c-suite and board of directors responsible.

Persistent uncertainty regarding how regulators would treat and supervise crypto activities, especially those facilitated by TradFi institutions, contributed significantly to the widespread perception of the sector as inherently high-risk. Banks, by their nature, are averse to uncertainty and strongly prefer clear, consistent and specific rules to inform their growth strategies. A meaningful reduction in regulatory uncertainty has the potential to fundamentally alter how banks assess the risks and rewards with offering crypto-related services. While banks like Bank of New York, Deutsche Bank and Standard Chartered have already begun progressing initiatives around crypto custody and other use cases, institutions have largely preferred to wait until crypto risks fall within their risk appetite.

Perfect regulatory clarity simply does not exist.

Is regulatory clarity here?

Can regulatory clarity catalyse a paradigm shift for financial institutions operating in the crypto ecosystem? Is regulatory clarity already here, or is more detail on the way, as promised by President Trump? In pursuit of Trump’s goal to establish the United States as the ‘crypto capital of the planet,’ his Administration issued the Executive Order (E.O.) on Strengthening American Leadership in Digital Financial Technology on January 23 – marking a distinct shift from the policy stance of the administration of President Joe Biden, which had taken a largely crypto-skeptical stance that prioritised regulatory enforcement action over guidance and engagement with the private sector. The Trump E.O. outlined an aggressive timeline for an initial salvo of reforms.

• Within 30 days (Feb 22), agencies were required to identify all regulations, guidance, documents and orders affecting the digital asset sector.
• Within 60 days (March 24), agencies were directed to modify or rescind any provisions inconsistent with the Administration’s pro-crypto stance.
• Within180 days (July 22), a White House-led Working Group will deliver a proposed federal regulatory framework to the President, addressing the issuance and operation of digital assets, including stablecoins.

Thus far, regulators under the Trump Administration have made several announcements, with varying degrees of consequence for banks – each announcement, however, was aimed at creating a more permissive environment for innovation via cryptoassets. To date, some of these announcements have been more meaningful to the banking community than others. The most critical shift being the Office of the Comptroller of the Currency (OCC), the Federal Depository Insurance Commission (FDIC) and the Federal Reserve announced their joint decision to no longer require that banks demonstrate the adequacy of their crypto risk management controls and seek supervisory non-objection before engaging in cryptocurrency-related activities.

Although banks continue to face higher barriers to entry than crypto-native firms, this policy shift represents a modest step towards leveling a playing field that favours speed and agility to bureaucratic deliberation. Additional announcements, especially those that provide regulatory specificity and lower bank compliance costs, are precisely the preconditions TradFi has required before engaging more comfortably with this technology.

These regulatory developments parallel positive signals from Capitol Hill regarding the passage of stablecoin legislation and other pro-crypto bills. Earlier this year, Bank of America CEO Brian Moynihan told an interviewer that ‘if they make that legal, we will go into that business.’ Similarly, JP Morgan CEO Jamie Dimon has commented that ‘stablecoins are real. How they’re used and how they’re protected by regulators is an issue they have to deal with.’

Institutions that can effectively coordinate and manage multiple digital asset initiatives enterprise-wide will be best positioned to realise advantages as the market evolves

Navigating the crypto environment

As the old adage goes, not making a decision is itself a decision: financial institutions that continue to hesitate in developing and progressing a cryptoasset strategy, despite these positive tailwinds, are in effect deciding that they are willing to take the risk of falling behind peers who are pressing ahead with crypto-related innovations. As such, we advise that banks consider the recommendations below for action.

1. Resist the myth of regulatory clarity

Given the Trump Administration’s repeated assurances of delivering regulatory clarity, some institutions may prefer to delay crypto initiatives until further progress on a crypto regulatory regime is made. But further delay in advancing your firm’s crypto strategy is misguided for three reasons.

First, some banking institutions already offer crypto-denominated products and services; additional delay only places those firms that hesitate at a greater competitive disadvantage. Second, perfect regulatory clarity – in its most unambiguous form – simply does not exist . Waiting for perfect information is about as satisfying as Waiting for Godot. The regulatory perimeter around cryptoassets is becoming clearer and will continue to be iterated upon over time. Third, if TradFi begins to participate in the cryptoasset space now, as regulation matures, banks and other financial institutions will be in a better position to shape regulatory and policy outcomes in a positive manner.

2. Leverage your institution’s size, complexity and expertise

While the organisational complexity and oversight structures of traditional financial institutions can limit speed to market relative to crypto-native firms, these same features confer unique advantages. Institutions that can harness the full breadth and depth of capabilities across their organisations will be best positioned to offer a wide range of crypto products and services – and do so at scale.

Accordingly, banks that minimise duplication of efforts across business lines will be best positioned to succeed. While different departments may initially explore digital asset opportunities independently based on their respective areas of specialisation, as initiatives mature, coordination and centralisation becomes critical. Without organisational alignment, banks risk duplicating efforts, missing opportunities for synergy, and adopting fragmented approaches to product development and risk management. Institutions that can effectively coordinate and manage multiple digital asset initiatives enterprise-wide will be best positioned to realise advantages as the market evolves.

3. New wine, old bottles

Banks that recognise the enduring consistency of risk management principles across both traditional and blockchain rails can proactively design and implement effective financial crime compliance frameworks, irrespective of the specific cryptoasset use case. This approach reinforces the notion that while underlying technologies may evolve, the principles guiding effective financial crime risk management remain the same. The Bank Secrecy Act imposes obligations on both TradFi and crypto firms to institute transparency-yielding controls that inform the assessment, identification and mitigation of financial crime risks – especially with respect to customer identity, transaction monitoring, and the source and purpose of funds.

Applying risk management principles to the blockchain is akin to putting new wine in old bottles. Banks can apply timeless fundamentals from their existing risk management practices while also taking advantage of new innovative capabilities that specialise in transparency enhancement on the blockchain. There are tools available that consolidate data to support enhanced due diligence on crypto exchanges, enabling institutions to assess an exchange’s exposure to financial crime activity observable only on the blockchain. Wallet and token screening tools are also critical, providing near or real-time insights into potential sanctions risks and links to illicit financial activity. Financial crime investigations on the blockchain leverage analytics to trace asset flows, identify suspicious patterns and report these activities to law enforcement.

Looking ahead

Finally, banks interested in issuing stablecoins should implement monitoring mechanisms to track these tokens ‘in the wild’ – that is, understand the behaviour and movement of their tokens once leaving the control of the issuer. Together, these measures enable institutions to uphold transparency, strengthen risk detection and meet financial crime compliance obligations in the evolving crypto ecosystem.

While the cryptoasset space can at first glance seem mystifying and daunting to anyone at a traditional financial institution, the puzzle pieces are increasingly falling into place for those keen to seize the opportunity – and time is ticking for those who hesitate.