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The pro-crypto administration of Republican President-elect Donald Trump is likely to ease the crypto-bank relations.
Investment bank TD Cowen suggested that cryptocurrency companies will have an easier time finding banking partners under the Trump administration, according to a recent The Block report. TD Cowen’s Washington Research Group, led by Jaret Seiberg, wrote in a note on Monday:
“[Banks’ responsibility for compliance] is going to cause some banks to be cautious even if Trump’s regulators flag fewer concerns about increased ties between traditional financial and crypto. […] It is why some banks may still decide the risk is too great while others will embrace the opportunity. In addition, some crypto entities may balk at any government oversight. That could limit how comfortable banks are at working with them.”
TD Cowen is a United States-based multinational investment bank and the financial services division of TD Securities operating a broker-dealer and investment management division. The company had $8.83 billion worth of assets under management as of 2022.
Mild optimism
While it is unlikely that all banks will suddenly become completely open to working with crypto firms without reservations, Seiberg argues that stronger ties are “inevitable.” He believes that as the market matures, banks will become increasingly willing to accept crypto risk.
Seiberg believes that banks could soon be allowed to issue their own stablecoins. This would ensure that reserves are audited and managed by regulated financial institutions while preventing a leak of capital from the banking system. Some banks might also trade crypto assets in a way that is not dissimilar to how those institutions currently trade equities.
This would be especially likely if Congress enacts new crypto market structure laws. The analyst also expects restrictions on crypto-backed loans to be eased, as well as those on digital payment systems leveraging stablecoins and other digital assets.
Many crypto professionals in the United States claim that traditional financial institutions and regulators have discriminated against them since the industry’s inception. In mid-November, his sentiment led Republican state attorney generals and the DeFi Education Fund to sue the United States Securities and Exchange Commission (SEC) and its five commissioners.
