2025 will be the year in which banks will return to digital assets, investing years of caution due to a regulatory and challenging market environment. After the withdrawal of SAB 121 and the new orientation of a key federal bank regulator, the banks are now back in the race to develop cryptographic strategies to serve their clients and stay competitive.
What we are seeing now is the renewed interest of banks in all areas, from credit cooperatives and community banks to medium and regional players to Wall Street giants. What is at stake for banks are the existing and possible relationships of customers, since they compete for the market share among retail and institutional participants who seek to participate in digital assets. Banks that lead the road can differentiate their products and create efficient capital income flows.
You are reading Crypto Long & Short, our weekly newsletter with ideas, news and analysis for the professional investor. Register here to get it on your entrance tray every Wednesday.
For both cultural and technological reasons, many banks can end with license custody solutions to use it internally or associate with a crypto-native subcustodian. One of the most important decisions that a bank has to take is who chooses as a custody partner: a critical question since cybersecurity incidents continue to be holders.
From safety and regulatory state to commercialization time, what should banks consider as they return to digital assets?
Market time and regulatory state
One of the first things that any bank should consider is how its approach will affect the time strategy to the market and competitive positioning. For banks, working with a regulated custodian is more than a cash verification exercise.
The association with a cryptography custodian that has created a comprehensive risk management and compliance infrastructure, from AML and KYC controls to information security policies, can give banks a simplified market strategy. Banks and their cryptographic partners should not only speak the same language, but regulate in the same base.
Cryptographic partners must demonstrate that they meet and exceed bank regulatory expectations. Doing doing can help regulators and senior bank leadership on board, in addition to creating the peace of the minds among customers.
Security and resistance
Banks that are admitted to cryptography want to do it quickly, but also safely to maintain the confidence gained with so much effort of their customers. That is why banks often put security in the search for a cryptographic custodian.
As a baseline, any encryption custody partner must adopt an end -to -end security approach, which involves multiple defense lines for each transaction. The custody partner must also have a solid technology to help ensure that each transaction reflects the intention of the client. Keeping assets legally separated from other customers and the company can help mitigate risk.
Finally, custody solutions must comply with strict standards of operational resilience to which banks are retained, so that they can climb along with the bank’s digital asset business.
Integrated solution
Banks should also consider the ease of integration into existing systems, as well as the ability to support future income and income income flows. Crypto custody integration into central banking systems can help optimize income opportunities, operational efficiency and commercialization time.
Safe custody is really the basis of additional offers, from guaranteed loans to trade to rethinking. As banks seek to meet the demand for the final client of full participation in the ecosystem, it is key to work with a custodian that offers an integrated set of services.
This year will be a turning point for cryptographic adoption in traditional banks of all sizes, with cryptographic native custody solutions that provide a clear path for banks to remain competitive and meet customer demand.
