It was only a matter of time.
When would crypto be offered by banks to their clients? This is something that I wondered for much of the past year.
Recent stablecoin legislation is going to pull many of the major banks into crypto. We are going to see deposits tokenized via a stablecoin, allowing banks to operate in a manner similar to Circle.
Then we have token swapping. If there is a stablecoin, it only makes sense to have the ability to enter and exit crypto trades. To me, it was a logical step for these institutions.
PNC is starting the process. Through its connection to Coinbase, the bank is providing the service to its customers.
This is the next phase of the evolution. Banks are going to be the front end to back end features. One is going to be the ability to enter and exit crypto.
My expectation is that every major United States bank offers this service. By the end of 2026, it will be the norm.
It is likely we see this spread to different countries. Why wouldn't banks in Europe offer the same? Japan? Australia?
The answer is they are not going to pass on this opportunity. After all, the banks are doing this to make money. If it enhances the bottom line, banks are all in.
PNC Bank is ahead of the curve in the US.
PNC Bank has launched direct spot bitcoin trading for eligible PNC Private Bank clients, becoming the first major U.S. bank to offer native bitcoin access directly through its own digital banking platform.
Obviously, Coinbase is going to handle the custody services. This is not the purchase of Bitcoin via a derivative such as an ETF. Instead, the cryptocurrency itself is purchased, much in the same way as through Coinbase directly.
So why would someone use this service instead of Coinbase? I would say convenience. If one can "hold" Bitcoin through the same app as one banks, it brings it all together. As I said, it puts PNC in the position of simply being a front end for Coinbase.
Naturally, we can presume that PNC will have a charge for this service.
The new service allows qualified private banking clients to buy, hold, and sell bitcoin without using an external cryptocurrency exchange.
The offering is powered by Coinbase’s Crypto-as-a-Service (CaaS) infrastructure, which provides trading, custody, and settlement capabilities embedded directly within PNC’s Private Bank Online platform via its Portfolio View interface.
In an era of network effects, it is crucial that all entities get people on their application and strive to keep them. Having bank clients log out and go to the Coinbase app is not in the bank's best interest.
This keeps it all in-house, at least from the user perspective.
For now, the focus is upon Bitcoin. This is how it always starts.
I would not be surprised to see PNC quickly move to add Ethereum. Again, this is the common practice.
At some point, we are going to see these front ends offering hundreds of tokens. The bank is going to offer as much as it can to capture trading dollars. A PNC can provide access to anything Coinbase has on its platform.
This is not unlike what is happening in the DeFi world. Applications are tying into different protocols to offer hundreds (if not thousands) of tokens. Again, the goal for those apps is akin to the banks: to keep people there.
Crypto-assets are becoming the norm. We are seeing wealth managers starting to recommend having a portion of the portfolio in digital assets. This is a major shift from even a year ago.
Part of the drive in this direction are assets such as Bitcoin and Ethereum ETFs. This allows for exposure to the asset without directly having to custody it.
The access to capital for the crypto markets is growing. We can all agree the banks can bring some major buying power. Obviously, not all of the capital will enter crypto. In fact, it is logical to believe that only a small portion of that will end up purchasing assets such as Bitcoin.
What is key is we are talking about trillions of dollars. Even 5% of that total is a large number.
PNC Bank is now in the game. Who else will follow?
