Digital Asset Banking: The Natives

The rapid growth of digital assets into a trillion-dollar industry creates the need for institutional custody, brokerage, clearing, and settlement solutions. In traditional finance (TradFi), these services are typically fulfilled by bulge bracket banks, such as JP Morgan, Citi, or Goldman Sachs. However, the initial hesitancy of traditional firms to interact with digital assets created a gap that so-called crypto-native banks have filled.

In July 2020, the Office of the Comptroller of the Currency (OCC) updated its guidelines concerning digital asset custody for federally chartered banks. In particular, it specified these banks may offer digital asset custody services. The refreshed regulations signalled to the banking, digital asset, and FinTech communities that crypto-related banking services were now green-lighted by regulators. Since these changes, a number of crypto-native companies have gained state or federal banking charters including Anchorage Digital Bank, Avanti, Paxos, Protego, and Kraken.