By Jeremy Britton, Founder & CFO, BostonTrading

Why Crypto Investors Still Struggle With Traditional Banks

As someone who has been a crypto investor for more than a decade, I have experienced over 30 bank account closures. In many cases, traditional financial institutions treated cryptocurrency activity as a high-risk category, often grouping legitimate crypto investing alongside industries considered high-risk for compliance purposes.

My accounts were not closed for illegal activity. They were closed because I used my own money to purchase legal digital assets through regulated cryptocurrency exchanges. For many early adopters, this became a frustrating reality of participating in the emerging digital asset economy.

This experience was far from unique. Across Australia, the United States, and Europe, banks tightened compliance procedures following anti-money laundering (AML) regulations and concerns about fraud, leading to widespread “debanking” of some cryptocurrency users and businesses. Recent reports suggest regulators are increasingly scrutinising these practices as crypto becomes more mainstream.¹

The Rise of Neobanks and Crypto-Friendly Banking

Just a year ago, I would have confidently predicted that neobanks would outperform many traditional banks.

The logic seemed straightforward:

• Cryptocurrency adoption has grown rapidly over the past decade.
• Digital-first consumers increasingly prefer mobile banking.
• Neobanks embraced financial technology and blockchain innovation more quickly.
• Physical bank branches are becoming less relevant in a digital world.

Research from the World Economic Forum and Statista indicates that digital banking adoption continues to accelerate globally, with younger consumers overwhelmingly favouring app-based banking services over traditional branch networks.²

For crypto investors, neobanks often offered:

• Faster account approvals
• Better integration with crypto exchanges
• Lower fees
• Modern user experiences
• More openness toward digital assets
• Many appeared well-positioned to dominate the future of finance.

Why Traditional Banks Are Changing Their View on Cryptocurrency

The banking landscape in 2025 looks very different from just a few years ago.

For more than a decade, much of Wall Street viewed cryptocurrency with scepticism. Today, many of the world’s largest financial institutions are actively embracing digital assets.

Major institutions including Charles Schwab, JPMorgan Chase, and Bank of America have expanded their blockchain, tokenization, and digital asset initiatives.³

Institutional investment in Bitcoin and other digital assets has accelerated following the approval of spot Bitcoin ETFs and growing regulatory clarity in several jurisdictions.⁴

Traditional banks possess several advantages that are difficult for newer competitors to replicate:

Large Customer Bases: Established banks have decades (sometimes centuries) of customer relationships and extensive financial data.

Regulatory Experience: Large institutions maintain dedicated compliance teams capable of adapting to evolving cryptocurrency regulations.

Capital Strength: Traditional banks generally have stronger balance sheets and greater access to funding during economic downturns.

Brand Trust: Despite criticism, many consumers still view established financial institutions as safer custodians of their money.

Are Neobanks Losing Their Competitive Advantage?

Neobanks remain agile and innovative. Their ability to adopt emerging technologies quickly gives them a significant advantage in rapidly evolving markets.

However, recent years have shown that innovation alone does not guarantee survival.

Several digital-only banks worldwide have struggled with profitability, rising customer acquisition costs, increased regulatory requirements, and tighter funding conditions. Some have merged, scaled back operations, or exited markets altogether. [?]

The challenge facing many neobanks is that while technology can be built quickly, trust and long-term customer relationships often take decades to establish.

The Future of Crypto Banking: Convergence Rather Than Competition

Rather than witnessing a complete victory by either traditional banks or neobanks, we may be seeing the beginning of a convergence.

Traditional banks are increasingly adopting:

• Blockchain technology
• Tokenized assets
• Digital custody solutions
• Real-time payments
• Crypto-related investment products

Meanwhile, successful neobanks are becoming more bank-like by:

• Strengthening compliance frameworks
• Seeking banking licenses
• Expanding lending products
• Building broader financial ecosystems

The distinction between a bank and a fintech company is becoming less clear every year.

Predictions for the Future of Banking and Cryptocurrency

While forecasting is always risky, several long-term trends appear increasingly likely:

1. Crypto Integration Will Become Standard

Most major financial institutions are likely to offer some form of cryptocurrency exposure, custody, or tokenized asset services within the next decade.

2. Fewer Banks Will Be Needed

Digital banking, automation, and artificial intelligence continue to reduce the need for extensive branch networks and back-office operations.

3. Consolidation Will Continue

Both traditional banks and neobanks may experience significant consolidation as competitive pressures increase.

4. Customer Experience Will Become the Key Differentiator

The winners will likely be institutions that combine strong compliance, digital convenience, and access to emerging financial technologies.

The Banking Industry’s Next Evolution

A year ago, I believed neobanks would dominate the future of crypto banking. Today, I see a more balanced outcome.

Traditional banks may be slow-moving, but they possess enormous resources, established customer bases, and regulatory expertise. Neobanks remain innovative and adaptable, but they must prove they can achieve long-term sustainability in increasingly challenging economic conditions.

My expectation is that a handful of highly successful neobanks will emerge as dominant global players, while many traditional banks will either modernise, merge, or disappear. The future of banking is unlikely to belong exclusively to either group.

It is possible that the winners will be those institutions that successfully bridge the gap between traditional finance, customer service, and the rapidly expanding world of digital assets.

Jeremy Britton is a financial adviser, economic author and the founder of BostonTrading. He has been involved in cryptocurrency investing since the early years of Bitcoin. BostonTrading launched one of the world’s earliest crypto-focused managed investment funds in 2016.

NOTES

1. Australian Treasury – Review of Debanking: https://treasury.gov.au/review/de-banking/  ; FCA – UK Payment Accounts: Access and Closures Update: https://www.fca.org.uk/publications/corporate-documents/uk-payment-accounts-access-and-closures-update  ; AUSTRAC – New Guidance Released on Debanking: https://www.austrac.gov.au/new-guidance-released-debanking

2. World Economic Forum – Digitalisation in Banking: https://www.weforum.org/stories/2022/05/heres-how-to-really-reap-the-benefits-of-the-digitalization-in-banking-trend/  ; Statista – Neobanking Users by Region: https://www.statista.com/forecasts/1401379/neobanking-users-by-region/

3. Charles Schwab crypto trading announcement; https://pressroom.aboutschwab.com/press-releases/press-release/2026/Charles-Schwab-Announces-Details-of-Spot-Crypto-Trading-Launch/default.aspx ; JPMorgan Kinexys: https://www.jpmorgan.com/kinexys/digital-assets/tokenized-collateral-network  ; Bank of America patent report: https://newsroom.bankofamerica.com/content/newsroom/press-releases/2024/03/bofa-patents-increase-nearly-70–in-5-years.html

4. SEC statement: https://www.sec.gov/newsroom/speeches-statements/gensler-statement-spot-bitcoin-011023  ; SEC approval order: https://www.sec.gov/files/rules/sro/nysearca/2024/34-99306.pdf  ; iShares Bitcoin Trust ETF https://www.ishares.com/us/products/333011/ishares-bitcoin-trust-etf ; Reuters ETF coverage https://www.reuters.com/business/finance/grayscale-bitcoin-trusts-shares-jump-after-first-inflow-since-january-2024-05-06 ; https://www.robeco.com/en-au/insights/2024/09/the-neobank-era-has-arrived