Wired: The "Banking Breakthrough" Moment for Crypto Companies in the Trump Era
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Wired: The "Banking Breakthrough" Moment for Crypto Companies in the Trump Era
For years, cryptocurrency businesses have been shut out of the U.S. banking system. However, after the Trump administration took office, a number of fintech companies extended olive branches to crypto firms.
Navigating Web3 tides with focused insightsBy: Joel Khalili, reporter at Wired
Translation: Saoirse, Foresight News
At the beginning of last year, Azeem Khan, a New York-based crypto entrepreneur, had just raised $19 million in seed funding for his startup Morph and was searching for a place to deposit the money. Before applying for a U.S. bank account, he consulted with lawyers who told him: "There's absolutely no way you can pull this off without obstacles."
As it turned out, even that pessimistic prediction was overly optimistic. After being rejected by multiple U.S. banks over six months, Khan eventually gave up. He resorted to depositing part of the funds interest-free at a bank in the Cayman Islands, while converting the rest into crypto assets managed by third-party custodians.
For years, founders in the cryptocurrency industry have faced similar struggles: U.S. banks either refuse to offer loans or checking accounts, or suddenly freeze their accounts. Without banking partners, crypto businesses struggle to operate. They cannot easily transact in dollars, securely store investor funds to earn interest, or even pay employees and suppliers. "This is a well-known dilemma across the entire industry," said Khan.
Just over a year later, the situation began to shift. Since Trump returned to the White House in January this year, pledging to end so-called "discrimination" against crypto companies, several U.S. fintech firms—including Meow, Mercury, and Brex—have begun aggressively offering banking services to crypto startups. Khan recently raised $25 million for his new crypto venture Miden and says he has become a prime target for these fintech providers.
This shift has made it significantly easier for crypto companies to incorporate, hire staff, and conduct business in the United States, aligning with Trump’s vision of making the U.S. a global cryptocurrency hub. However, their fate remains tied to political winds. While the Trump administration has created a more relaxed regulatory environment, no legislation currently guarantees long-term access to banking services for crypto firms.
"Although the current administration is relatively friendly, the related policies haven't been codified into law. There are no new regulations ensuring the industry won’t face a reversal when leadership changes," Khan admitted.
During the Biden administration, the crypto industry grew frustrated by repeated banking rejections, with insiders frequently claiming, "This is a conspiracy." They alleged that the federal government was deliberately trying to kill the industry by quietly excluding crypto firms from the banking system.
Nic Carter, a prominent crypto venture capitalist, became one of the main proponents of this theory, labeling the alleged discriminatory campaign as "Operation Chokepoint 2.0." The term references an anti-fraud initiative under the Obama administration, during which U.S. officials reportedly encouraged banks to avoid doing business with industries deemed undesirable, such as adult entertainment and payday lenders.
After Trump took office, multiple congressional subcommittees held hearings on the alleged "Operation Chokepoint 2.0." In March this year, Republican senators introduced the Financial Institution Reform, Modernization, and Relief (FIRM) Act, aiming to prohibit banks from considering "reputational risk" when reviewing account applications, thereby curbing alleged discriminatory practices. However, the bill has not yet reached a vote.
For crypto companies, the current policy shift is undoubtedly favorable. Although accessing overseas bank accounts—typically located in the Cayman Islands or Switzerland—is less challenging, such accounts come with significant drawbacks: they yield no returns on deposits, involve cumbersome settlement processes with U.S. counterparties, charge high fees, and lack coverage from the Federal Deposit Insurance Corporation (FDIC), which insures up to $250,000 per depositor in the U.S.
According to sources, although major banks like JPMorgan Chase have started internally testing crypto technologies, most remain unwilling to serve crypto firms. "The big-name banks everyone knows have zero involvement with the crypto industry," said David McIntyre, COO of DoubleZero, a startup focused on building infrastructure specifically for crypto networks.
This vacuum has created opportunities for smaller fintech firms to grow their deposits by attracting crypto clients. "Today, entrepreneurs in crypto almost always go with platforms like Mercury or Meow," said Khan. "Meow especially is very aggressive—if they see any crypto company announce a funding round, they immediately reach out to the founder."
These fintech firms often market themselves as "crypto-friendly," offering integrated services like stablecoin transfers and operating with far greater flexibility than traditional financial institutions. Meow, for example, is led by 30-something CEO Brandon Arvanaghi, who runs his LinkedIn profile like a TikTok account, complete with short videos.
"The technology behind these U.S. fintech firms is vastly superior to that of some random unknown bank in the Cayman Islands or Switzerland. In terms of platform functionality, customer service, and every other aspect, they're simply better," McIntyre said.
Mercury declined interview requests for this article, while Meow and Brex did not respond.
In reality, these fintech firms act as a "software layer": they operate through traditional banks licensed in the U.S., handling user interface development and customer acquisition, while partner banks manage the actual deposits. Specifically, Meow partners with Grasshopper Bank, while Brex and Mercury work with multiple banks. This model gained widespread traction in the U.S. during the pandemic, when banks were forced to accelerate digital transformation.
"Ideally, this model allows banks to access more advanced technology," said Craig Timm, senior director of anti-money laundering at ACAMS, an organization that offers financial certifications. Timm previously worked as a financial crime expert at Bank of America and the U.S. Department of Justice. "For fintechs, it means they can focus on what they do best—product development, marketing, and acquiring new customers—without having to spend enormous time and money obtaining a banking license, a complex and costly process."
However, these partnerships typically require fintechs to follow rules set by their partner banks, including restrictions on the types of clients they can serve. For instance, a Mercury spokesperson said the firm cannot provide accounts to crypto businesses that hold customer funds, such as exchanges.
"They’re essentially just putting a shell on someone else’s bank," explained McIntyre, formerly at Brex. "They must comply with the underwriting requirements, regulatory standards, and specific client eligibility criteria set by the partner bank."
Timm noted that expanding into new business areas—such as crypto—has historically been a source of friction between fintechs and their partner banks. Fintechs aim for rapid growth, while partner banks bear ultimate responsibility for maintaining compliance with licensing requirements, including strict anti-money laundering controls.
"These partnerships often fail due to a lack of alignment," Timm added, sometimes resulting in "mismatched risk appetites."
This leaves crypto companies in a precarious position: although fintech firms are currently eager to provide them with U.S. bank accounts, their underlying partner banks could withdraw support at any time.
When asked whether their partner banks have committed to long-term service for crypto clients, neither Meow nor Brex responded. Nic Corpora, a spokesperson for Mercury, said the company works closely with its banking partners "to ensure aligned risk appetite, so that once we onboard a client, we can best support them over the long term."
Under a president who has appointed pro-crypto regulators and pledged to end the so-called "Operation Chokepoint 2.0," such risks may seem distant. But what happens after Trump leaves office?
"From a risk management standpoint, it would be unwise for companies like ours to rely solely on accounts provided by U.S. fintechs," McIntyre said. "When the government changes, interpretations of the law change—but the laws themselves remain unchanged."
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