How will banks evolve and overcome the growing control of crypto?

The adoption of crypto continues to increase as more users turn to the sector, not to mention the increased inflation, wider macroeconomic pressures and fear of missing out on that possibility.

In this shift, where do traditional financial institutions like banks fit? Beincrypto consulted several experts to explore what the future of these institutions will be in a changing space.

The Future of Banking and Cryptocurrency: Conflict or Collaboration?

Fabian Dori, chief investment officer at Digital Asset Bank Sygnum, told Beincrypto there is a certain level of competition between banks and crypto. However, even more important is the convergence between the two sectors.

He explained that institutional interest in cryptography has increased significantly. This is evidenced by an exponential increase in the number of companies adopting cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) as primary reserve assets, as reported by Beincrypto.

Therefore, Dori emphasized that banks recognize the investment hypotheses and operational benefits of technology’s cryptographic crypto, such as real-time settlement and transparency. Meanwhile, cryptographic platforms employ compliance and risk management frameworks such as TRADFI.

Despite the unpredictability of the market, more institutions now see it as “something that needs to be collaborated” rather than side projects.

“In Sygnum, the conversation has changed. It’s never been about whether crypto has a role, how to bring it without confusing everything else, it was once a different world. Tokenized assets, stable coins, and decentralized technologies – are now slowly appearing in traditional finance.

Shawn Young, chief analyst at MEXC Research, agreed. He added that with the increase in cryptocurrency adoption, banks are reassessing their role as intermediaries.

“In 2025, banks and crypto are steadily moving towards convergence rather than conflict. We’ve seen clear evidence that banks no longer view blockchain as their enemy.

Nevertheless, Bitget CEO Gracy Chen stressed that he is not heading towards a simple conflict or pure collaboration between banks and crypto. Instead, she sees it as a process of absorption and containment.

She noted that early codes were inherently anti-banking, rooted in Saipanpunk’s ideals, mistrust of focus and resistance to Fiat’s monetary policy. Bitcoin, for example, appeared for reasons after the 2008 banking crisis.

Chen further stated that the spirit remains persistent, especially within the Maximialist community of defi, privacy coin and bitcoin.

“The majority of crypto capitals now flow through bank-linked onramps, custodians, and increasingly regulated stubcoins. Institutions don’t want existential war with crypto. They want to tame it, package it and withdraw fees as they used ETFs and derivatives.

Beyond Stablecoins: What’s next for the bank?

It is worth noting that banks are very aware of the competition they face from the crypto industry. That is likely why major US banks are exploring potential Stablecoin Ventures not only in the US but also in countries like South Korea.

These efforts are increasing amid a significant change in the regulatory environment. Between Procrypt’s president and the procrypted crypto bill, the space is set for potential growth, and banks are willing to be left behind.

Dori also expects the bank to go far further than stablecoins. He outlined that their offering could be expanded to launch their own Layer 2 (L2) networks tailored to tokenized securities, yield staking products, custody solutions, and even compliance-sensitive applications.

“The value proposition is clear. Programmable money and tokenized assets allow for new revenue streams from settlements, real-time financial management, and sequencer fees or collateral services. In parallel, the first banks are beginning to explore the credit market for crypto.

Chen noted that additional services are likely to include institutional staking as a service, crypto index funds and synthetic assets. She emphasized that providing more cryptographic native services is not only logical, but is strategically necessary for banks to maintain relevance and future business models.

“The line between banks and crypto infrastructure providers is blurred as the maturity of finance that has been adopted. The future of banks is not about offering crypto as a product, but building crypto as a layer of the financial system,” he disclosed to Beincrypto.

Meanwhile, Anthony Georgiades, founder and general partner of Innovating Capital, told Beincrypto that banks are moving beyond their apparently basic exposures and are beginning to build a comprehensive range of crypto-related services. According to him,

“Now, many banks are trying to offer more, from the secure storage of digital assets to the possibility of cryptocurrency payments and faster international transfers via blockchain. Some banks are adding investment options, such as cryptocurrency ETFs and research tools for high-end clients.

Furthermore, analysts at MEXC Research noted that banks can evolve into hybrid financial institutions in the next stage. They could possibly provide regulated crypto trading, real-time blockchain settlements, and management of tokenized securities.

“A race continues for banks to build a trust-based bridge that is compliant between Tradfi and Crypto-Native ecosystems,” Young declared.

Are banks ready to compete in the crypto market?

Banks may have a willingness to survive in a changing market, but do they have infrastructure? Well, that’s not the case.

“Banks cannot rely on the same systems they have been using for decades. Using blockchain means processing wallets, smart contracts and on-chain data in real time.

Dori pointed out that compliance is another important issue. Everything from KYC to private key management needs to be rethinked from a regulatory standpoint. He pointed out that it wasn’t as simple as plugging in cryptography into older products. It changes how value movement and control need to be constructed.

“But the biggest change is the way of thinking. This is not just a new asset class. It comes with new rules, new behaviors, different paces. Institutions that are curious, ask the right questions and build teams that understand both risks and possibilities.

Nevertheless, he detailed that the biggest challenge for banks is preparing institutional know-how rather than technology. The need for legacy systems, high compliance standards, and decentralized 24/7 financial rails creates hurdles. Trustworthy partners, regulatory clarity, and familiar infrastructure are key to overcoming these challenges.

Additionally, Georgiades has turned its attention to the importance of regulatory compliance across different regions.

“They need to make sure they are consistent with regulations in all the markets they operate, particularly around money laundering, customer identity and digital assets rules. Then the technology comes in. They need a secure system that can handle crypto custody and fast, reliable transfers.

In addition to this, Chen thought that banks needed to clearly understand MICA in the EU, Vara in the UAE, and SFC guidelines in Hong Kong. You must also be able to segment operations by region and scope of regulations. Compliance with travel rules for Crypto transfers, KYC, AML, and counter-terrorism financing requirements is also essential.

“Most importantly, to support tokenization, there will be an increase in investment in new infrastructures such as facility-grade custody solutions, blockchain node access and scalable APIs. The biggest challenge is legacy infrastructure and technology debt. Most core banking systems have a low balance of real-time payments, on-chain trading, or risky, unbalanced.

Chen also spoke about the concept of “strategic paralysis.” This is a common challenge for traditional financial institutions when they seek to adopt new innovations.

Without support from the top level of an organization, innovation tends to stall, and projects remain in the “exploration” stage without proper budgets, duties, or urgency to move forward.

“The internal team of banks must acquire expertise in the deep domain of blockchain, meaning opening the door for crypto talent to support special crypto units. Finally, one of the biggest challenges for banks is to partner with crypto exchanges, wallet providers and compliance companies,” Young contributed.

Traditional banks and native crypto companies: a new era of competition

It is clear that as more banks enter the space, they will gain some share of the market. For now, how unknown remains.

Nevertheless, one thing is certain: their presence will increase competition. Experts also agreed that the shift would raise the bar.

“It’s going to shake things up a bit. Large banks bring size, trust and deep customer relationships. This means they can attract users who have never been used to crypto before. But while it may seem like bad news for crypto companies, many banks need the help of infrastructure, compliance and technology, these crypto companies provide the solutions they need to express their capital.

Chen detailed that banks will provide size, clarity of regulations and access to the capital markets of assets sold and stupid and stupid assets.

However, she believes that companies from crypto origins have an advantage in defi, protocol development, and Web3 integration that are not yet permitted.

“This is where differentiation must occur through innovation, community governance and the creation of programmable financial tools, through the inability of banks to replicate,” she said.

Dori also confirmed similar feelings. He explained it:

“There’s still a fundamental edge that crypto companies hold: speed, culture, and the ability to quickly ship user-centric products. You could see branches. Some crypto companies partner with or be regulated with banks, while others double the open and allowed innovation.”

The executive emphasized that this was ultimately beneficial. Cryptocurrency has always thrived through competition and constant improvement. As more institutions enter the space, the market advances, but innovators who continue to focus on user experience and technology will remain leadership.