Global Banks Embrace Crypto as US Regulation Falls Behind

• Institutional Bank Adoption: Five of the top 20 global banks are currently using Coinbase to build crypto infrastructure into their products, according to claims by CEO Brian Armstrong.
• Asset Management Strategy: BlackRock has publicly stated its ambition to tokenize its entire portfolio of funds, signaling a major strategic shift by the world’s largest asset manager.
• Global User Base: Crypto adoption has reached a massive scale, with Armstrong estimating that “something like 500,000,000 people have used it globally.” This figure is supported by market research from firms like Crypto.com, which estimated 580 million crypto owners worldwide by the end of 2023.
• Stablecoin Backing: Armstrong referenced a law, which he called the “Genius Act,” mandating that U.S.-regulated stablecoins must hold 100% of their reserves in short-term U.S. Treasuries.

The integration of crypto services by five of the world’s top 20 banks represents a significant validation of blockchain technology by the traditional finance (TradFi) sector. Rather than treating crypto as a fringe asset, these institutions are beginning to view it as essential infrastructure for future financial products. This trend is further amplified by BlackRock’s vocal commitment to tokenization. As CEO Larry Fink has stated, tokenization represents the next generation for markets, a move that could fundamentally reshape asset management by increasing efficiency, liquidity, and accessibility.

This institutional momentum, however, is occurring largely within a global context, creating a stark contrast with the U.S. landscape. Armstrong characterizes the Biden administration as having tried to unlawfully kill this industry in America, fostering an environment of uncertainty that stifles innovation. The result is a potential brain drain and capital flight, as crypto-native companies and TradFi players alike may choose to build in jurisdictions with more predictable regulatory frameworks. The nervousness Armstrong observes among banks isn’t just about crypto; it’s about a broader fear of being outmaneuvered by more agile, technology-first competitors in a rapidly evolving financial ecosystem.

While Armstrong’s perspective highlights the frustrations of the crypto industry, the regulatory actions in the U.S. can also be interpreted as a necessary response to market volatility and high-profile failures like FTX. From a regulator’s standpoint, the primary mandate is consumer protection and financial stability, which may necessitate a more cautious and deliberate approach than the industry desires. The “hostility” could be framed as rigorous oversight intended to bring crypto into compliance with long-standing financial laws.

Furthermore, Armstrong’s mention of a “Genius Act” appears to be a misstatement. The most prominent piece of recent legislation addressing stablecoins is the Clarity for Payment Stablecoins Act of 2023, which has been discussed in committee but has not been passed into law. This highlights the complexity and slow pace of creating new regulations, which often lags behind technological innovation. The adoption by global banks, while significant, may also be more exploratory than the claims suggest, representing pilot programs and infrastructure testing rather than a full-scale, customer-facing rollout.

The key forward indicator will be the specific crypto-integrated products launched by the global banks working with Coinbase Institutional. Monitoring whether these are custody solutions, trading services, or tokenization platforms will reveal the depth of their commitment. On the asset management front, any SEC filings from BlackRock related to tokenized funds or pilot programs will be a major milestone. In the U.S., the political landscape is paramount; the outcome of upcoming elections could drastically alter the leadership and policy direction of crucial bodies like the SEC. Finally, the progress of actual stablecoin legislation, like the Clarity for Payment Stablecoins Act, will be the most telling sign of whether the U.S. can create the regulatory clarity the industry seeks.

• Institutional adoption of crypto is no longer a future hypothetical; major global banks and asset managers are actively building the required infrastructure.
• A significant gap is widening between accelerating global crypto integration and the lagging, often contentious, regulatory environment in the United States.
• Tokenization of real-world assets is emerging as a primary strategic focus for TradFi giants like BlackRock, signaling a potential long-term shift in market structure.
• Regulatory clarity for stablecoins remains a critical, unresolved issue in the U.S., and establishing clear guidelines is essential for bridging the gap between digital and traditional finance.
• The competitive threat from fintech and crypto is forcing traditional banks to innovate, though their relationship with the crypto industry remains complex and strained under current regulations.