The current Trump administration has taken recent steps to encourage the financial services sector to embrace digital assets. Specific to banking, The President’s Working Group on Digital Asset Markets outlined several actions that have been taken across the various regulatory agencies to further this cause. These actions include the rescission of several Biden administration era Securities and Exchange Commission (SEC) Staff Accounting Bulletins that prohibited publicly traded banks from offering custody services for digital assets, and the joint statement issued by the Office of the Comptroller of the Currency (OCC), The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve System that reaffirmed the legal permissibility for banks to custody digital assets. On the legislative front, the CLARITY Act has been passed by the House and the U.S. Senate Banking Committee has introduced a draft of the Responsible Financial Innovation Act of 2025. Both Acts attempt to outline regulatory frameworks for digital assets.
The increased regulatory clarity is providing confidence to financial institutions to engage in digital asset services.
Banks have slowly been expanding their suite of digital asset services. Historically, banks have primarily engaged with digital assets through providing core banking products and services to digital asset market participants to varying degrees as well as facilitating customer access to digital asset markets through services. As digital assets have proved their staying power, more banks are venturing into the space via crypto trading and custody, crypto ETPs and tokenization. Other areas we see financial institutions engaging in are private crypto funds and crypto-enabled payments.
With encouragement from relevant federal agencies and the second Trump administration, we can expect:
The OCC has reaffirmed that national banks are permitted to secure storage of digital assets, custody of tokenized securities and support for institutional crypto holdings. Larger banks are offering this service through their own platforms as they have the resources to develop these products while smaller banks and credit unions are partnering with companies that already have the infrastructure in place.
Since the administration has explicitly supported USD-backed stablecoins and has banned the development of a central digital bank currency (CBDC), large banks are already poised to take advantage of these opportunities. Similar to custody services, smaller regional banks will be more likely to partner with fintechs to offer USD banked stablecoins as well as tokenized lending products.
Banks offering digital asset services face a complex and evolving landscape of risks and regulatory challenges. These concerns include:
Historically, there has been a lack of a clear regulatory framework that prohibited responsible innovation to facilitate responsible customer engagement with digital assets and digital asset technology. While some steps have been taken to roll back previous restrictions in this space, there is much work to be done to create a clear, comprehensive framework across the various regulatory agencies. This includes banks’ continued responsibilities to comply with anti-money laundering and customer identification rules. In general, regulators expect traceable logs and robust access controls with proactive compliance frameworks. Current U.S. AML/CFT guidance is currently lacking as they do not consider decentralized protocols, but failure to meet current standards can lead to massive penalties. Beyond fines, non-compliance can also result in damage to customer trust and market reputation. Furthermore, banks utilizing sub-custodians or external platforms introduce additional compliance and operational risks.
The inclusion of crypto into traditional finance introduces potential volatility and contagion. Historically, the potential risks posed by the digital ecosystem to traditional financial systems have been limited, but as the services provided to crypto intermediaries increase, those risks will increase.
Traditional insurance programs may not cover digital asset activities, requiring new risk transfer strategies. Historically, traditional carriers who have underwritten financial institutions’ involving traditional assets might be less inclined to take on the risks associated with digital assets. In general, insurance carriers have been slower to respond to this shift under the current administration, resulting in some clunky or gap filled solutions. As more traditional financial institutions become further embedded into the digital asset ecosystem, the longevity of this exposure becomes evident and the need for more insurance carriers to develop solutions becomes paramount.
As the risk landscape for banking in the digital asset space evolves, engaging your broker early is essential. A proactive approach ensures compliance with complex and evolving requirements and helps in developing robust compliance frameworks and risk management strategies. Additionally, they can assist in identifying and securing appropriate insurance coverage for unique risks like cybersecurity, technology, financial stability, and legal and reputational concerns.
WTW hopes you found the general information provided here informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
