When bitcoin came out, supporters believed that the decentralized cryptocurrency would decimate the banking industry. Years later, as digital currencies became more mainstream, these networks were suddenly commanding billion dollar valuations. Meanwhile, cryptocurrency exchanges, brokerage services, and over-the-counter market makers have started to look into purchasing shares of banks and even becoming the banks themselves.

If You Can't Beat Them, Join Them

A lot has changed since the Bitcoin network was launched back in 2009 when the cryptocurrency was a tiny little network with just a few users. Now there are over 1600+ digital assets and the entire cryptocurrency market capitalization of all of them combined is valued at $294Bn USD. Back in the early days, incumbent financial institutions scoffed at cryptocurrencies but now it's pretty hard for them to ignore the massive economy growing around them.

These days some of the exchanges and market makers are becoming incredibly large and dealing with very large quantities of money. Moreover, a few businesses and cryptocurrency exchanges look like they are adopting a different kind of attitude — 'If you can't beat them, join them,' by either attempting to become banks or purchasing shares of these financial institutions.

The San Francisco Unicorn Coinbase Looks Into a Federal Banking Charter

Powerful Cryptocurrency Firms on the Road Towards Becoming BanksFor instance, the unicorn cryptocurrency exchange Coinbase has been a digital asset heavyweight since the early days and the firm continues to make more money while expanding its services. There are those that believe Coinbase will someday become a fairly large sized 'bitcoin bank' with its 20Mn users that have traded $150Bn USD worth of digital assets since the company's inception. Back in May, the public found out that the San Francisco exchange was recently exploring a federal banking charter, other banking licenses, and had been meeting with U.S. regulators.

Reports had detailed that Coinbase had been visiting officials at the U.S. Office of the Comptroller of the Currency (OCC) in early 2018. The largest U.S. exchange by volume didn't comment on the firm's meeting with the OCC but made a general statement about dealing closely with government officials so they are sure they have the proper licenses. A federal banking charter would allow Coinbase to offer a plethora of banking features.

Binance to Launch a 'Decentralized Community Owned Bank'

Powerful Cryptocurrency Firms on the Road Towards Becoming BanksAnother extremely large international cryptocurrency trading platform, Binance, has become one of the largest exchanges in the world and just recently the firm purchased a 5 percent stake in a financial institution called Founders Bank. Binance says the bank based in Malta will utilize cryptocurrency tokens and distributed ledger technology. The Office of the Prime Minister of Malta's junior minister for financial services, digital economy, and innovation, Silvio Schembri, stated during the bank announcement, "We are honored to be chosen as the location of the first global community-owned bank."

Binance and the Founders Bank are attempting to get a license in the EU so they can operate under the correct regulatory statutes. The firm explains that token investors will have ownership over the bank and Changpeng Zhao, Binance's CEO, believes Malta could wind up being a hotspot for this type of financial technology.

Malta is the fusion ground for traditional and blockchain finance now.  A lot can happen in 3 short months," Zhao explained to his Twitter followers.

Powerful Cryptocurrency Firms on the Road Towards Becoming Banks

Litecoin Foundation Acquires 10 Percent Stake in German Bank

A few days before the Binance announcement, the Litecoin Foundation revealed the organization and the firm Tokenpay had purchased 9.9 percent stake in WEG Bank AG. The goal is similar to the Binance – Founders Bank roadmap, as the German WEG Bank AG, the Litecoin Foundation, and Tokenpay will offer blockchain and cryptocurrency solutions to customers. The creator of the cryptocurrency litecoin (LTC) and the managing director of the Litecoin Foundation, Charlie Lee, explains LTC will be utilized in the deal. "I'm looking forward to integrating Litecoin with the WEG Bank AG and all the various services it has to offer, to make it simple for anyone to buy and use Litecoin," Lee stated on July 10.

Lee divulges further on July 17, on the Reddit forum r/litecoin:

People have brought up valid concerns that we still need to work with and be approved by players in the current financial systems like Visa and SWIFT, but we definitely have a much higher chance of succeeding now that we own a stake in a bank with bank licenses.

Is the Age of Cryptocurrency Banks Coming?  

There are many other firms who are growing exponentially in size due to the popularity of cryptocurrencies these days and many of these companies move a lot of money. The cryptocurrency firm Xapo is a good example as the company claims to store roughly $10Bn USD worth of digital assets across five different continents. Another unicorn cryptocurrency firm, Circle Internet Financial Ltd., also wants a federal charter so it can provide more types of banking services. The Boston-based firm is also working with the U.S. Securities and Exchange Commission (SEC) in order to sell tokens. With all the bank purchasing and federal charter attempts, the question remains — Will these cryptocurrency banks decimate the current financial incumbents or become them?