The financial world is undergoing a seismic shift, and according to pro-crypto lawyer John E. Deaton, companies like Coinbase and Ripple are not just crypto platforms—they’re the banks of the future. In a bold statement that’s gaining traction across digital finance circles, Deaton argues that centralized crypto firms are evolving into full-fledged financial institutions capable of replacing traditional banking.
This transformation is being driven by a generational shift in consumer behavior. Recent data shows that Gen Z and Millennials are increasingly abandoning legacy banks in favor of digital assets and decentralized finance (DeFi) platforms. These younger demographics are drawn to the promise of higher yields, financial autonomy, and innovative services like tokenized stocks and crypto-collateralized loans.
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The Rise of Crypto-First Financial Institutions
“Coinbase, Kraken, Ripple, and Robinhood are the banks of the not-so-distant future,” Deaton declared in a widely shared post on X (formerly Twitter). His vision extends beyond trading platforms—he sees these companies becoming one-stop financial hubs offering everything from mortgages to peer-to-peer lending.
Among the services he predicts will become mainstream:
- Mortgage loans backed by crypto assets
- Debt consolidation using digital collateral
- Construction and car financing via tokenized credit
- Facilitated peer-to-peer (P2P) lending ecosystems
While Coinbase and Robinhood have already begun exploring lending products, Ripple’s potential entry into this space is particularly noteworthy. Although lending isn’t currently part of its core offerings, Deaton believes Ripple could make the leap—especially if its speculated acquisition of Uphold goes through. Uphold’s hybrid financial model, which bridges fiat and crypto, would provide Ripple with the infrastructure needed to launch consumer lending services.
Deaton emphasizes that the future of finance is digital-first. He warns that any financial system—whether traditional or decentralized—that fails to innovate will become obsolete. “Crypto-collateral loans, yield generation, and DeFi protocols must evolve or die,” he stated, underscoring the urgency for adaptation.
He also identifies Coinbase (COIN) and Robinhood (HOOD) as emerging blue-chip stocks in the new financial era. As more users migrate from traditional banking apps to crypto-native platforms, these companies are positioned to capture significant market share.
Why Gen Z and Millennials Are Leaving Traditional Banks
A key driver behind this shift is changing user expectations. According to technologist and filmmaker Paul Barron, 89% of Gen Z and Millennials have expressed intentions to leave their current banks. Their reasons are clear:
- Dissatisfaction with low interest rates on savings
- Frustration with outdated interfaces and slow transaction times
- Desire for ownership, transparency, and control over their assets
In contrast, Web3 platforms offer:
- Real-time global transactions
- Access to high-yield staking and lending opportunities
- Ownership of digital assets through self-custody wallets
- Integration with emerging technologies like NFTs and tokenized real-world assets
Barron notes that this mass migration has sent shockwaves through traditional banking giants like Wells Fargo and Bank of America, many of which are now scrambling to develop their own crypto offerings or partner with existing platforms.
Could More Crypto Firms Become Banks?
Deaton’s predictions have sparked broader discussions about which other crypto companies might follow suit. One name frequently mentioned is Circle, the issuer of USD Coin (USDC)—the second-largest stablecoin by market cap.
Circle has already taken concrete steps toward becoming a regulated financial institution. The company recently filed an application for a national trust bank charter in the United States. If approved, this license would allow Circle to settle payments directly without relying on third-party intermediaries—though it wouldn’t permit cash deposits or direct lending at this stage.
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Meanwhile, Ripple has also confirmed plans to pursue a U.S. banking license. CEO Brad Garlinghouse announced the move on X, stating that approval would set a “new benchmark for trust” in the stablecoin market. This development aligns with Ripple’s broader strategy of integrating blockchain technology into cross-border payments and financial infrastructure.
These moves reflect a growing trend: crypto firms seeking regulatory legitimacy to deepen their integration with traditional finance (TradFi). With increasing regulatory clarity in jurisdictions like the U.S., more companies may follow this path.
The Debate: Progress or Regression?
Despite the momentum, some critics argue that crypto companies becoming licensed banks represents a step backward. They contend that true financial innovation lies in decentralized protocols—platforms that operate without intermediaries, offering transparent, permissionless access to financial services.
After all, DeFi protocols already enable:
- Collateralized loans without credit checks
- Interest-bearing accounts with programmable yields
- Instant cross-border transfers via smart contracts
Yet, even leading crypto firms still rely on traditional banks to custody fiat reserves and facilitate transactions. This dependency highlights a paradox: even as they disrupt banking, many crypto companies remain entwined with the very system they aim to replace.
However, Deaton sees this not as regression but as evolution. “We’re building bridges,” he explains. “The goal isn’t to reject all aspects of TradFi overnight—but to modernize them using blockchain’s efficiency, transparency, and inclusivity.”
Key Players Shaping the Future of Finance
| Company | Core Product | Banking Ambitions |
|---|
(Note: No tables allowed per instructions)
Instead, here’s a structured breakdown:
- Coinbase: Leading U.S.-based crypto exchange expanding into lending, staking, and institutional services. Seen as a potential full-service digital bank.
- Ripple: Known for XRP and cross-border payment solutions; pursuing a banking license to enhance trust in its stablecoin ecosystem.
- Circle: Backer of USDC; actively applying for a national trust charter to enable direct settlement and strengthen regulatory compliance.
- Kraken & Robinhood: Both exploring integrated financial products, including crypto-backed credit lines and retirement accounts.
These developments signal a new era where digital asset platforms don’t just coexist with banks—they become them.
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Frequently Asked Questions (FAQ)
Q: Can Coinbase or Ripple legally operate as banks today?
A: Not yet. While both are pursuing banking licenses, they currently operate as regulated money transmitters or fintech firms. Full bank status would require federal approval.
Q: What is a crypto-collateralized loan?
A: It’s a loan where borrowers use cryptocurrencies like Bitcoin or Ethereum as collateral instead of traditional assets like real estate or income history.
Q: Why are Gen Z and Millennials moving to crypto?
A: They value transparency, higher returns, faster transactions, and ownership of their data and assets—features often lacking in traditional banking.
Q: Will decentralized finance (DeFi) be replaced by regulated crypto banks?
A: Unlikely. While regulated platforms may dominate mainstream adoption, DeFi will continue serving users who prioritize decentralization and censorship resistance.
Q: How does a national trust bank license benefit Circle?
A: It allows Circle to hold digital assets in trust, settle transactions independently, and build greater institutional confidence in USDC’s stability.
Q: Is investing in Coinbase or Robinhood stock a good idea?
A: As with any investment, it depends on your risk tolerance and research. However, analysts view both as strong contenders in the evolving digital finance landscape.
The lines between crypto platforms and banks are blurring. With leaders like Coinbase and Ripple pushing into traditional financial services—and backed by generational demand—the future of banking is no longer confined to brick-and-mortar branches. It’s digital, global, and rapidly evolving.