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The landscape of digital assets is undergoing a significant shift as pro crypto regulatory clarity begins to take shape. Policymakers are moving faster than the price of Bitcoin. In recent weeks, significant developments, such as the U.S. Securities and Exchange Commission’s (SEC) withdrawal of the contentious Staff Accounting Bulletin 121 (SAB 121) via SAB 122 and President Trump’s January 23, 2025 Digital Assets Executive Order, signal a bullish trajectory for crypto policies. Meanwhile, traditional banks, burdened by outdated frameworks and resistance to the emerging digital asset industry, risk establishing their foothold in this rapidly evolving sector.
The SEC’s Withdrawal of SAB 121: A Victory for Crypto Firms
SAB 121, introduced during former SEC Chair Gary Gensler’s tenure, required financial institutions to account for customer-held crypto assets as liabilities on their balance sheets. While purportedly intended to protect investors from insolvency risks, critics lambasted the guidance as overly punitive and impractical for innovation. SEC Commissioner Hester Peirce quickly celebrated the SEC’s decision to revoke SAB 121in an X/Twitter post, and bid SAB 121 “a not-so-fond farewell”.
SAB 122 directs firms to follow FASB and international accounting standards, which better suit the evolving crypto landscape. Peirce highlighted that this change removes a regulatory barrier, fostering innovation and collaboration between crypto firms and financial institutions. This rollback reduces operational burdens and encourages institutional participation, paving the way for broader crypto adoption.
The Digital Assets EO: A New Dawn for Policy Clarity
On the heels of the SEC announcement came President Trump’s much-anticipated Digital Assets Executive Order. This policy framework overhaul addresses longstanding issues, including the legal categorization of digital assets, taxation, and cross-border applications.
The EO outlines key pillars aimed at fostering innovation while ensuring consumer protection:
Clear Definitions: It mandates the classification of cryptocurrencies based on their functionalities—whether as securities, commodities, or payment tokens.
Tax Simplification: To reduce compliance complexities, the EO establishes a standardized approach to crypto tax reporting and defers capital gains for certain blockchain-based projects.
Global Collaboration: Recognizing crypto’s global nature, the policy includes provisions for partnerships with international regulators to harmonize standards.
These measures signal the administration’s recognition of blockchain technology’s potential to revolutionize finance and other industries.
Debanking and a Lagging Response
In stark contrast to the policy momentum, traditional banks remain ensnared in skepticism and operational inertia, much of which can be attributed to prudential regulators’ admonitions. Documents obtained by Freedom of Information Act (FOIA) request initiated by Coinbase revealed that U.S. regulators informally discouraged banks from expanding crypto services, despite officially denying a policy of “debanking”, also referred to within the crypto industry as Chokepoint 2.0.
While crypto adoption surged globally, most banks have failed to innovate their offerings. Their hesitancy contrasts starkly with the likes of Fidelity and Morgan Stanley, which are actively expanding crypto-based investment products.
Bridging The TradFi/DeFi Divide
As regulatory clarity improves, banks must pivot quickly to avoid irrelevance. Opportunities include:
Collaborating with fintech and blockchain startups: Banks can integrate blockchain to enhance cross-border payments and real-time settlement systems.
Investing in crypto infrastructure: Developing secure custodial services and compliance solutions will attract institutional clients exploring crypto markets.
Educating stakeholders: From brokers to customers, knowledge-building is critical to bridge the gap between traditional finance and emerging technologies.
Failure to adapt will likely result in a widening gap between innovators and incumbents, where fintech players dominate while banks struggle to maintain relevance.
The SEC’s revised stance and the administration’s pro-crypto policies underscore the urgency for financial institutions to adapt. While regulators open the door for innovation, banks are at a crossroads: evolve or be left behind. As the digital asset revolution accelerates, the institutions that embrace this paradigm shift will shape the future of finance, while those clinging to legacy models risk extinction.
Players vs. Naysayers
While many banks have hesitated to embrace the digital assets revolution, others have positioned themselves as trailblazers, leveraging crypto innovations to secure a foothold in the industry. However, the stark contrast between public rhetoric and private actions among certain institutions reveals a hypocrisy that cannot be ignored.
Forward-Thinking Institutions: Fidelity and Goldman Sachs
Some financial institutions have embraced the crypto wave, proactively adapting their models to stay ahead of the curve. Fidelity Investments stands out as a pioneer in institutional crypto adoption. Since launching Fidelity Digital Assets in 2018, the company has offered secure custodial services and direct access to bitcoin for institutional investors. Fidelity was also among the first to launch a Bitcoin exchange-traded fund (ETF) in Canada and played a key role in the U.S. debut of spot Bitcoin ETFs in January 2024, when nine new spot Bitcoin ETFs and two conversions hit the market, collectively drawing $1.9 billion in inflows during their first three days of trading, according to Reuters.
Similarly, Goldman Sachs, once a crypto skeptic, has now emerged as a player in legitimizing digital assets within traditional finance. The bank operates a robust digital asset desk, offering clients access to cash-settled derivatives, options, and futures tied to Bitcoin. According to Mathew McDermott, Goldman’s Global Head of Digital Assets, the firm has developed a comprehensive suite of crypto products to meet growing institutional demand.
In the second quarter of 2024, Goldman made its debut in the spot Bitcoin ETF market, purchasing $418 million worth of bitcoin funds, including a $238 million stake in BlackRock’s iShares Bitcoin Trust. The bank also disclosed positions in ETFs from Grayscale, Fidelity, and Invesco, as detailed in CNBC’s coverage of its Q2 filings.
The Laggards: Bank of America and Wells Fargo
In stark contrast, Bank of America (BoA) has been a notorious laggard. While quietly filing for blockchain-related patents for years, the bank has publicly downplayed the potential of cryptocurrencies. BoA’s leadership has repeatedly warned clients of crypto’s volatility, characterizing it as a “speculative bubble.” Despite these claims, the bank’s internal research division acknowledged in a 2021 report that blockchain technology could fundamentally reshape finance. BoA’s inconsistency underscores its struggle to reconcile crypto’s potential with its conservative stance. In a recent Squawk Box interview during Davos 2025, BoA CEO Brian Moynihan hedged his bets regarding institutional adoption of crypto, acknowledging BofA and other banking incumbents may have to adopt crypto payments given the regulatory shift.
Wells Fargo has similarly been slow to act. Although offering limited crypto-related investment products to wealthy clients in 2021, years behind competitors, the bank has focused primarily on cautionary narratives about crypto fraud and environmental concerns rather than embracing innovation. The bank’s approach began to pivot in 2024, permitting bitcoin ETF investments for clients who specifically requested access. Additionally, according to DeCrypt.co, paperwork filed with the SEC shows that the bank had purchased shares of Grayscale’s GBTC spot Bitcoin ETF, and that it also has exposure to Bitcoin Depot Inc., a Bitcoin ATM provider.
Playing Both Side of the Coin: JPMorgan Chase
Perhaps the most striking example of hypocrisy lies with JPMorgan Chase. For years, CEO Jamie Dimon has been one of bitcoin’s most vocal critics, famously calling it a “fraud” in 2017 and warning that it would “blow up.” Publicly, Dimon continues to maintain a stance of disdain for cryptocurrencies, repeatedly labeling them as speculative assets with no inherent value.
However, JPMorgan has been integrating blockchain and digital asset into its operations for years. The bank developed JPM Coin (now rebranded Kinexys Digital Payments), a digital token designed to facilitate instant cross-border payments for institutional clients, showcasing its faith in blockchain technology for real-world applications. Moreover, JPMorgan has become a key player in the Bitcoin ETF space, serving as an authorized participant for the Blackrock bitcoin ETF (IBIT).
JPMorgan’s dual approach—public skepticism paired with internal adoption—highlights a troubling trend among some legacy institutions. These banks publicly criticize cryptocurrencies, discouraging retail clients from participating with brash headlines, while leveraging the same technology to bolster their institutional offerings and operational efficiencies.
The Cost of Hypocrisy
This pattern of public disdain and private opportunism is more than a marketing inconsistency; it undermines trust. As retail investors increasingly notice this duplicity, they may shift loyalty to forward-thinking incumbents, fintech startups, crypto-native institutions that offer transparency and alignment with the industry’s ethos. Banks that remain insincere about their crypto involvement risk alienating a growing segment of clients who view blockchain technology as the future of finance. Transparency and trust are paramount in the new digital asset economy.
What Banking Professionals Need to Know and Do
As digital assets evolve, banking professionals face a clear choice: adapt or risk irrelevance. While some institutions have embraced blockchain technology, many still lag in understanding and integrating crypto into their services. Here’s how banking professionals can stay competitive:
Build Crypto Literacy
Crypto and blockchain are no longer fringe concepts. Banking professionals must understand blockchain’s foundational concepts, including cryptocurrencies, DeFi (decentralized finance), and NFTs. Staying informed about regulatory updates from the SEC, CFTC, IRS and prudential regulators is also critical. Internal continuing education and client education is key.
Recognize Blockchain’s Broader Potential
Blockchain’s value extends far beyond cryptocurrencies like Bitcoin and Ethereum. Key applications include:
Cross-border payments: Instant, low-cost global transactions.
Smart contracts: Automated agreements that streamline operations.
Tokenization: Turning real-world assets into digital tokens for fractional ownership.
Supply chain tracking: Enhancing transparency and efficiency.
Reimagine Products and Services
To meet evolving client needs, banks must innovate. Priority areas include:
Custody services for secure crypto storage.
Crypto-focused investments like spot crypto ETFs and tokenized securities.
Payment solutions that integrate crypto for seamless transactions.
Embrace Partnerships
Rather than reinventing the wheel, banks should collaborate with fintech startups and blockchain companies to accelerate adoption. Partnerships can fast-track blockchain implementation in clearing, settlements, and lending.
Align with Regulatory Trends
With increasing regulatory clarity, compliance can be a competitive advantage. By proactively addressing anti-money laundering (AML), know-your-customer (KYC), and taxation requirements, banks can position themselves as trusted leaders in the crypto space.
Foster Innovation and Agility
Internal inertia is often a bank’s biggest obstacle. Leadership must prioritize innovation by recruiting blockchain experts, upskilling staff, and piloting crypto-related projects.
The Turning Point for Financial Professionals
The digital assets landscape in the United States and beyond is evolving rapidly, creating both opportunities and challenges for financial professionals. With regulatory clarity improving, including the Digital Assets Executive Order and the withdrawal of SAB 121, the path is clear for broader institutional adoption.
Traditional banks can no longer justify a head-in-sand approach and now face an urgent and unavoidable crossroads: embrace innovation to lead in this new financial era or cling to outdated models and risk obsolescence. Financial professionals must act now to build the expertise, infrastructure, and partnerships needed to thrive. Those who hesitate may find themselves sidelined in this new digital asset economy.