What to Know

  • Financial firms are partnering with specialist providers to build crypto infrastructure, narrowing the divide between traditional finance and decentralized finance.
  • Two financial institutions managing more than $1 trillion each approved crypto products this summer, according to comments from Bitwise CEO Hunter Horsley.
  • The firms were not identified, and details on what the approvals allow or when client access begins were not disclosed.
  • Market participants say banks have shifted from resisting digital assets to enabling custody, tokenization and regulated trading.
  • Early bank entrants included Swissquote in 2017, DBS in 2020 and BBVA in 2021.
  • BNY Mellon began institutional crypto custody in 2022, while Nubank launched bitcoin and ether trading and LGT added crypto services that same year.
  • St.Galler Kantonalbank and Santander followed in 2023, while Zürcher Kantonalbank added retail trading in 2024.
  • Other major financial industry players including Standard Chartered, Charles Schwab, SoFi and Morgan Stanley have also entered the space.
  • Despite institutional expansion, crypto remains exposed to market prices, narratives and reflexive trading behavior.

Banks Step Further Into Digital Assets

The relationship between banks and crypto is undergoing a notable reset as major financial institutions move beyond skepticism and into product distribution, infrastructure partnerships and regulated access. What was once framed as a confrontation between bitcoin and the banking sector is increasingly being treated as an integration story, with financial firms looking for ways to offer clients exposure, custody and trading services through established channels.

The shift has become especially visible as large institutions continue to approve crypto products even during difficult market conditions. Bitwise CEO Hunter Horsley said this summer that two financial institutions managing more than $1 trillion each had approved crypto products, a development he characterized as a sign that major firms are no longer waiting for perfect market conditions before expanding access. The firms were not named, and the precise nature of the approvals, including when clients may gain access, was not disclosed.

That caution around details matters, but the broader direction is difficult to ignore. During the 2022 downturn, institutions of that size were not opening access in the same way, according to Horsley. The change suggests that crypto has moved from a speculative side topic inside many financial firms to a strategic product area that requires planning, compliance review and infrastructure support.

The Old Anti Bank Narrative Fades

For years, one of crypto’s defining cultural slogans was the idea of being long bitcoin and short the bankers. The phrase captured a mood of distrust toward legacy finance and a belief that decentralized networks could challenge the role of banks, brokers and custodians. That framing is now less useful in a market where banks are increasingly involved in the distribution and safekeeping of digital assets.

Horsley described the change in stark terms, saying that everyone has now put on the crypto jersey and that everyone works for crypto now. The point is not that every bank has become a crypto-native institution, but rather that the institutional conversation has shifted. Large firms are no longer debating only whether crypto should exist. Many are now assessing how to support client demand while operating inside regulatory, custody and risk frameworks.

Sygnum Chief Investment Officer Fabian Dori echoed that view, saying the old long bitcoin, short the bankers trade is over. In his framing, banks have moved from resisting digital assets to building, enabling or distributing them through custody, tokenization and regulated trading. That shift is being described by market participants as structural rather than merely cyclical, driven by clearer rules and client demand rather than by a short-lived rally in token prices.

Client Demand and Regulation Drive the Shift

Institutional adoption does not usually happen on ideology alone. Banks tend to respond when clients ask for access, competitors begin offering products, and regulatory conditions become easier to navigate. The current wave of crypto activity across traditional finance appears to reflect all three forces. Wealth clients, asset managers and institutional investors have continued to seek pathways into digital assets, while financial firms have looked for compliant ways to meet that demand.

Clearer rules have also helped move crypto from a reputational risk discussion into an operational planning process. Banks and brokerages still face compliance, custody, liquidity and suitability questions, but the existence of regulated trading channels and institutional-grade custody has made the asset class easier to integrate. For many firms, the question is no longer whether crypto can be ignored, but how access should be controlled, documented and delivered.

This does not mean that every institution is embracing the same level of exposure. Some firms are focused on custody, others on trading access, and others on tokenization or infrastructure partnerships. The common thread is that crypto is increasingly being treated as part of the financial product landscape, rather than as an external movement operating beyond the walls of traditional finance.

A Timeline of Bank Participation

The institutional path into crypto did not begin all at once. Swissquote added bitcoin trading in 2017, marking one of the earlier moves by a bank-linked platform into digital asset access. DBS followed in 2020, while BBVA entered in 2021. These early steps showed that regulated financial institutions could engage with crypto without abandoning traditional compliance expectations.

In 2022, BNY Mellon began institutional crypto custody, a major development because custody sits at the heart of financial market infrastructure. That same year, Nubank launched bitcoin and ether trading, while LGT added crypto services. These moves broadened the range of institutions involved, from large custodians to banking and wealth platforms.

The rollout continued in 2023, when St.Galler Kantonalbank and Santander followed with crypto-related services. Zürcher Kantonalbank added retail trading in 2024, further demonstrating how digital asset access has been moving from specialized platforms toward mainstream financial institutions. Other major financial industry players, including Standard Chartered, Charles Schwab, SoFi and Morgan Stanley, have also entered the space in different ways.

The timeline shows a market that has gradually shifted from experimentation to implementation. The pace has not been uniform, and institutions have taken different approaches, but the direction of travel has been toward greater participation, broader access and more formal infrastructure.

Specialists Gain a Larger Role

One of the most important features of the current phase is that many large financial firms are not trying to build every component themselves. Instead, they are partnering with specialist providers that already operate crypto custody, trading and settlement infrastructure. This allows established institutions to move faster while relying on firms that have developed technical expertise in digital assets.

Anchorage Digital CEO Nathan McCauley has said the firm’s client roster has increasingly reflected the convergence of traditional and decentralized finance over the past two years. His view is that large financial firms are partnering with specialist providers rather than building their own infrastructure from scratch. That approach mirrors how traditional finance often adopts new technology: large institutions may own the client relationship, while specialized firms provide the underlying rails.

This partnership model is also relevant for tokenization and real-world assets moving onchain. As financial instruments and asset representations are issued or tracked on blockchain networks, banks and asset managers need reliable infrastructure for compliance, custody and settlement. At the same time, crypto wrappers created by large asset managers show how digital asset concepts are being packaged for traditional distribution channels.

Traditional Finance and DeFi Move Toward One Market

The boundary between traditional finance and decentralized finance is becoming less rigid. McCauley has argued that the market is quickly heading toward a world where there is not traditional finance and decentralized finance, but simply finance. That view reflects a broader industry debate: if banks use blockchain rails, asset managers create crypto-linked products, and decentralized systems interact with regulated platforms, the old labels may become less meaningful.

Still, convergence does not mean uniformity. Decentralized protocols and regulated financial institutions operate with different assumptions, governance models and risk controls. Banks must manage compliance and client suitability, while decentralized systems often prioritize open access and automated execution. The emerging market may blend these features without fully erasing the differences.

For investors, the practical effect is likely to be broader access and more product choice. Crypto exposure may increasingly appear through familiar financial accounts, custody relationships and advisory channels. That could bring more participation, but it could also reshape the market’s culture as institutions gain a larger role in how digital assets are held and traded.

Market Behavior Has Not Disappeared

Institutionalization changes the infrastructure around crypto, but it does not remove crypto’s dependence on market prices. Dori has cautioned that the market’s character has not changed, describing institutionalization as a layer of infrastructure on top of crypto’s reflexive, narrative-driven trading rather than a replacement for it. In other words, banks may make access easier, but they do not eliminate volatility, sentiment swings or momentum-driven behavior.

This is an important distinction for clients entering through traditional channels. A product offered by a bank or major financial firm may feel familiar, but the underlying asset class can still behave differently from conventional holdings. Bitcoin and other digital assets remain influenced by liquidity, regulation, macro expectations, technology developments and market narratives.

As a result, the entrance of banks should not be mistaken for a guarantee of stability. It may improve custody, reporting, execution and access, but crypto’s price dynamics remain central. The sector’s next phase may therefore combine institutional infrastructure with the same rapid narrative shifts that have long defined digital asset markets.

Why This Matters for Crypto Investors

The embrace of crypto by traditional finance has several implications. First, it can expand access for clients who prefer to invest through established financial relationships rather than crypto-native platforms. Second, it can deepen market infrastructure by adding regulated custody, trading and tokenization services. Third, it can bring new standards for risk management, compliance and reporting.

At the same time, the shift raises questions about how crypto’s original ethos changes when banks become central distributors. Some early supporters saw digital assets as a way to reduce reliance on intermediaries. The current phase does not necessarily remove that possibility, but it does show that intermediaries are adapting rather than disappearing.

For FXCOINZ readers, the key takeaway is that crypto adoption is no longer only about retail speculation or crypto-native platforms. The sector is being absorbed into the broader financial system through partnerships, custody solutions and product approvals. That makes digital assets more accessible, but it also places them within the same institutional frameworks that crypto once sought to bypass.

Frequently Asked Questions (FAQs)

What is the main shift happening between banks and crypto?

Banks and large financial firms are moving from resisting digital assets to enabling access through custody, trading, tokenization and infrastructure partnerships.

Why is the phrase long bitcoin, short the bankers seen as outdated?

The phrase reflected an earlier crypto culture that positioned bitcoin against banks. It is seen as outdated because many banks are now helping distribute and support digital asset products.

What did Bitwise CEO Hunter Horsley say about institutional crypto approvals?

Horsley said two financial institutions managing more than $1 trillion each approved crypto products this summer, even though the firms were not identified and access details were not disclosed.

Which banks were early entrants into crypto services?

Swissquote added bitcoin trading in 2017, DBS followed in 2020, and BBVA entered in 2021. BNY Mellon began institutional crypto custody in 2022.

What role do specialist providers play in the new crypto infrastructure?

Specialist providers help large financial firms offer crypto services without having to build every technical component internally, especially in areas such as custody and trading infrastructure.

Does bank involvement make crypto less volatile?

Not necessarily. Institutional participation can improve access and infrastructure, but crypto remains exposed to price swings, narratives and reflexive trading behavior.

What is tokenization in this context?

Tokenization generally refers to representing assets or financial instruments on blockchain rails, which can support new forms of issuance, settlement or ownership tracking.

Are traditional finance and decentralized finance becoming the same thing?

They are becoming more connected, but they are not identical. Banks and decentralized protocols still operate with different rules, structures and risk models.

Why does this matter for everyday crypto investors?

Greater bank participation may make crypto easier to access through familiar financial channels, but investors still need to understand the risks of the underlying digital assets.

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