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What is a crypto bank?
Let’s start with the “crypto” part. Cryptocurrency, or crypto for short, is a digital form of money backed by computer code instead of a central banking authority such as the Federal Reserve. In June 2022, there were more than 19,000 cryptocurrencies; by March 2026, that number jumped to 47 million. Only a handful, such as Bitcoin and Etherium, have widespread appeal.
Now for the “bank" part: Any American institution able to call itself a bank must be regulated and licensed to hold U.S. dollars.
Definition
Put together, a crypto bank in the U.S. can mean a licensed financial institution that can hold and transact with customers’ dollars as well as crypto. Anchorage Digital Bank became the first federally chartered crypto bank in 2021, and its customers are primarily investing and wealth management firms. Before that, Wyoming created a charter in 2019 that enables crypto-based companies to become a limited type of bank called a special purpose depository institution. Two crypto banks with this charter are Kraken and Custodia.
These crypto banks can’t lend money like traditional banks, and they lack insurance through the Federal Deposit Insurance Corporation. In addition, they don’t have full federal regulation, such as supervision for potential money laundering, which might create some risks that regular banks don’t have.
🤓 Nerdy Tip
While crypto companies can become a type of bank, it’s best not to call a standard bank a crypto bank for simply offering crypto services. After all, a bank that has mortgages is not called a mortgage bank. In late 2025, the online bank SoFi became the first nationally chartered bank to provide a crypto trading platform alongside its traditional banking services.
What is crypto banking?
The term “crypto banking” can refer to a few different activities. Generally, the way people interact with cryptocurrency is by investing, not banking. That can involve buying and selling digital currencies on a trading platform. Traditional banking, on the other hand, is focused on managing cash and credit at a bank, such as with checking and savings accounts and loans.
» Learn more: Benefits and barriers of crypto banking
Crypto banking, at a consumer level, can refer to managing digital currency at a financial technology firm or financial services provider. These banking services can include simply holding a balance, making payments with a crypto debit card and even earning interest involving one or more cryptocurrencies.
» Check out this guide from NerdWallet about how cryptocurrency works
How do I get started with crypto banking?
To manage cryptocurrency, you first need to buy it. There are several different ways to buy cryptocurrency like Bitcoin, and not all methods are ideal for beginners. Many companies let you buy crypto and hold it on your behalf in their free crypto wallets that you must access through their websites or apps.
If you use a crypto exchange such as Coinbase or a financial tech firm such as PayPal, buying crypto can be straightforward: You can pay in U.S. dollars and receive the equivalent value in the digital currency you choose. Then, you can view your balance as you would a bank or investment account balance. Depending on the company, you may be able to send and receive crypto from other people.
Crypto holders who plan to use multiple platforms or Bitcoin ATMs for in-person transactions should consider crypto wallets that provide storage on software hosted on their computer or portable device. Such wallets let you make transactions without needing a company to confirm them.
Peer-to-peer payment companies Block (through Cash App) and PayPal (through PayPal and Venmo) as well as online bank SoFi let customers buy, sell and hold cryptocurrencies alongside any balances held in U.S. dollars. PayPal also lets you pay for online purchases with a crypto balance, which means you sell the currency back to PayPal at checkout.
Since these companies have established presences with mainstream banking services, they may be easy starting points to explore crypto. But watch for transaction fees and limits, including the types of crypto available. Square’s Cash App, for example, offers purchases of Bitcoin only, while PayPal and SoFi offer more cryptocurrencies.
» Want more options? See NerdWallet’s list of the best crypto platforms
What are crypto interest accounts?
Some crypto-based companies, such as Coinbase and Crypto.com, offer versions of a savings account, generally called a crypto interest account. These firms do something similar to what traditional banks do, but with crypto instead of dollars: The firms borrow the money in your savings account to make loans to other customers and pay you interest in return. Rates on crypto interest accounts can be attractive especially compared to traditional savings accounts, but they have more risks:
- Rates, as well as a cryptocurrency’s value itself, can change with market demand, creating more opportunities to lose money.
- Comparing annual percentage yields isn’t as intuitive as it is with traditional savings accounts where all accounts use the same currency.
- Consider fees, minimum limits and how long it can take to withdraw money back into U.S. dollars, especially since you're lending out what's in your crypto interest account.
- You may be unable to withdraw crypto indefinitely from an exchange during downturns in the crypto market.
» Want to boost savings the safe way? See the best high-yield savings accounts
Is crypto banking safe?
Because it's a newer and volatile currency, there are some inherent risks involved with managing your crypto.
- Your crypto isn’t protected by the FDIC or the Securities Investor Protection Corporation if the company you buy it from fails. For a bank account, the FDIC insures up to $250,000; and for a brokerage account, the SIPC covers up to $500,000. (SIPC coverage excludes losses from declining values of stocks and other assets.)
- The value of cryptocurrencies can fluctuate rapidly, so it’s best to avoid paying more for crypto than you can afford to lose.
- There’s no guarantee that you’ll get your money back, especially during a crypto crash.
One particular crypto service to be careful about are Bitcoin ATMs, which have grown in popularity among scammers. These machines are conveniently situated at gas stations and corner stores but have been used for scams such as government and business impersonations as well as fake tech support.
» Affected by the crash? Here’s a guide to navigating a crypto crash
What’s the future of crypto banking?
While the federal government has become more friendly to crypto since 2025, the banking industry remains slow to offer crypto-related services for its customers. Some banks with brokerage divisions offer crypto-specific funds to invest in. Several banks that previously offered crypto-related services such as Vast Bank and Quontic Bank dropped them in recent years. On the flip side, a federal regulator may approve trust bank charters for some brokers and crypto firms to allow them to become banks in a limited capacity, such as to hold deposits.But large questions remain for the future of crypto banking.
