Regulatory Scrutiny on the Battlefield between Traditional Banks and Cryptocurrency Companies, with a Spotlight on Trump's Administration's Policymakers

In recent months, several cryptocurrency companies, including Paxos, Circle, and Ripple Labs, have applied for national trust bank charters from the Office of the Comptroller of the Currency (OCC). These applications, made in mid-2025, follow a similar move by Circle on June 30 and Ripple on July 2. The aim is to operate as federally regulated banks, integrating traditional banking and blockchain technology.

The increased involvement of traditional financial institutions with crypto companies is a notable development. The Genius Act, which requires stablecoin issuers to register their business and maintain dollar-for-dollar reserves, is a testament to this growing relationship.

As digital assets become increasingly popular as a payment method and a tool for traders in the crypto market, authorities are working to define the features of interest in the cryptocurrency space and set boundaries for companies to operate within.

However, the regulatory landscape remains complex. Cryptocurrency startups are seeking ways to make stablecoins more financially advantageous in response to the Genius Act's no-interest requirement. Coinbase, for instance, has implemented a rewards scheme for some customers, but concerns have been raised that this may violate the Act's no-interest requirement.

In a significant move, Coinbase Global and JP Morgan Chase have reached a deal to directly link consumers' bank accounts with their crypto wallets. This development could potentially change the landscape of digital asset usage and integration with traditional banking systems.

Trade groups are opposing plans to grant banking licenses to these businesses, citing concerns about the potential risks and instability of the cryptocurrency market. The entry of new competitors, such as Ripple Labs and Circle Internet Group, into traditional finance may lead to increased competition and the possibility of strategic collaborations for banks.

The role of Trump-led regulators in this ongoing conflict between crypto firms and traditional banking institutions is significant. In March, SmartBiz became the first financial-technology company to receive regulatory approval to operate as a bank since the beginning of President Trump's administration.

The cryptocurrency industry, with its innovative approach, poses a threat to traditional financial institutions. However, it also offers opportunities for collaboration and growth. As regulations continue to evolve, it will be interesting to see how this dynamic relationship unfolds.