Crypto Companies Want National Bank Status – Is This the End of Decentralization?

Crypto companies are increasingly seeking national bank status in a bid to gain regulatory recognition and expand their market reach. This move could provide them with significant financial advantages, although the approval process remains lengthy and uncertain.

Legal experts have observed a noticeable increase in applications from crypto firms. Alexandra Steinberg Barrage, a partner at Troutman Pepper Locke, said her firm is currently working on several applications. With new banking regulators in office, companies are cautiously hopeful about their prospects.

The Appeal of Bank Status for Crypto Firms

Obtaining national bank status would allow crypto firms to access customer deposits, lower borrowing costs, and build credibility within the financial sector. Carleton Goss, a partner at Hunton Andrews Kurth, explained that a bank charter would reduce capital expenses and open new opportunities for growth.

However, the road to approval is far from easy. In 2023, only four bank charters were granted by U.S. regulators. Between 2010 and 2023, the average yearly approvals stood at just five, a stark contrast to the 144 annual approvals from 2000 to 2007. This makes securing a charter a formidable challenge for crypto firms.

Divided Opinions Within the Crypto Community

Not everyone in the crypto world is on board with this approach. Some enthusiasts argue that applying for bank status undermines the very concept of decentralization that cryptocurrencies were built on.

Crypto supporter Cedric Beau expressed his frustration, saying, "Bitcoin doesn’t need banks. Any crypto company trying to become a national bank isn’t decentralizing; it’s integrating into the same system Bitcoin was built to replace." Another user, MooseyB17, voiced a similar opinion, stating, "The whole point of crypto is to get away from banks."

On the other hand, some believe this move could provide long-term benefits. Regulatory approval may offer the industry clearer rules and broader acceptance. One user commented, "Regulatory clarity incoming? This could be a game changer for Bitcoin and crypto adoption."

Bitcoin doesn’t need banks.

And any crypto company trying to become a national bank isn’t decentralizing, it’s integrating into the same system $BTC was built to replace.

You don’t fix a broken system by joining it. You exit it. — Cedric Beau (@Web3BeauCedric) March 18, 2025

The Future of Crypto Firms in the Banking Sector

For crypto firms, applying for national bank status is a strategic gamble. While the path is difficult, achieving regulatory recognition could bring newfound credibility, unlock financial resources, and encourage mainstream adoption.

The crypto industry remains divided on whether this push aligns with its core principles. In the coming months, decisions on these applications will likely shape the future of crypto's relationship with the traditional banking system.

Also Read: Where Will Bitcoin Be in 10 Years? Future Growth and Predictions