David Sacks, a prominent venture capitalist and key crypto adviser to Donald Trump, is arguing that traditional banks will only fully integrate digital assets once new U.S. legislation clarifies how the industry is regulated. His comments come as Washington debates a major market structure bill aimed at defining the roles of agencies like the SEC and CFTC in overseeing cryptocurrencies.
Sacks’ stance underscores growing pressure from industry leaders for a clear legal framework before mainstream financial institutions expand deeper into crypto. The discussion reflects broader tensions between innovation and regulation as policymakers weigh how to bring digital assets into the existing financial system.
Wall Street weighs in How major banks are preparing for a post market structure bill crypto era
Major financial institutions are closely tracking developments around a potential U.S. market structure bill for digital assets, viewing it as a key reference point for how trading, custody, and disclosure rules might evolve. Rather than making sweeping changes in advance, banks are generally focusing on internal assessments: mapping how proposed frameworks could effect their existing compliance systems, risk controls, and client-facing services.This includes scenario planning around how clearer definitions of what constitutes a security or a commodity in the crypto space could change which regulators they answer to and what kinds of products they can safely offer under current licenses.
At the same time, these firms are weighing the operational steps required to be ready if the legislative landscape shifts. That can involve reviewing custody arrangements, examining how on-chain transactions would be recorded alongside traditional assets, and testing how existing anti-money-laundering and know-your-customer procedures would apply to tokenized instruments. While the full impact of any market structure bill remains uncertain, the direction of travel is prompting banks to treat crypto less as a standalone experiment and more as a segment that may soon be subject to familiar institutional standards, even as they acknowledge that regulatory timelines and final details are still in flux.
Regulation to revenue Inside David Sacks’ case that clear rules will unlock institutional crypto adoption
Venture capitalist David Sacks argues that the missing link between crypto’s technological maturity and large-scale institutional participation is not demand, but regulatory clarity. In his view, many traditional financial institutions remain on the sidelines not because they dismiss digital assets, but because they face uncertainty over how existing rules apply and what future enforcement might look like. By setting out clear, consistent frameworks on issues such as custody, disclosures and compliance obligations, policymakers could reduce legal and operational risk for banks, asset managers and corporates that are already exploring exposure to Bitcoin and other digital assets. That, Sacks suggests, could turn today’s cautious experimentation into more meaningful allocations across balance sheets and investment products.
Simultaneously occurring, Sacks’ case implies that well-defined rules would do more than simply “greenlight” institutional capital-they could also shape the revenue models that develop around it. Clear standards on how crypto service providers must safeguard client funds, report activity and manage conflicts of interest would influence which types of exchanges, custodians and intermediaries gain trust and scale. While this would not eliminate all risk or volatility from the sector,it could create a more predictable environment in which both established financial firms and native crypto companies know how to build compliant products. In that sense, regulation, if constructed carefully, becomes a precondition for durable institutional adoption rather than an obstacle to it, aligning market growth with a more stable and clear rule set.
From pilot programs to full integration How banks plan to offer custody trading and tokenization at scale
Large financial institutions are moving cautiously from limited pilot initiatives toward broader deployment of digital asset services, with most starting by testing custody, basic trading functionality, and initial tokenization use cases in controlled environments. Custody, in this context, refers to the secure storage and management of clients’ digital assets, often using specialized infrastructure and strict compliance procedures. Pilot projects allow banks to evaluate the operational, legal, and cybersecurity implications of holding cryptocurrencies and tokenized assets on behalf of clients, and also to test how these services integrate with their existing core banking systems, risk controls, and regulatory frameworks. Only after these internal tests meet institutional standards for security and compliance do banks consider opening access to a wider range of customers.
As banks look beyond pilots, the move to full-scale integration involves embedding digital asset capabilities into familiar channels such as online banking portals, wealth management platforms, and institutional trading desks. In practice, that can mean enabling clients to view crypto balances alongside traditional holdings, routing trades through approved venues, and using tokenization to represent assets such as securities or other financial instruments on distributed ledgers. Scaling these services requires standardized processes for settlement,reporting,and audit,and also clear governance on how digital assets fit within broader product offerings and risk policies. While this progression holds the potential to make crypto access more straightforward for mainstream investors, it also highlights ongoing constraints, including regulatory uncertainty, evolving technical standards, and the need to align innovative services with conservative banking risk appetites.
Risks roadblocks and timelines What must happen before traditional finance fully commits to digital assets
Even as Bitcoin’s market infrastructure matures, structural and regulatory hurdles continue to slow the pace at which traditional finance integrates digital assets at scale. Large institutions must navigate evolving compliance expectations,from anti-money laundering and know-your-customer rules to capital treatment frameworks that are still being interpreted for crypto exposure. At the same time,the operational plumbing that underpins spot trading,derivatives,custody and settlement is still being tested against the standards long applied in equities,bonds and foreign exchange. Questions around custodial risk, clear legal ownership of tokens, and how to handle events such as protocol changes or network disruptions remain central concerns for banks, asset managers and their regulators.
Before traditional finance can move from pilot programs to broad, balance-sheet-level commitments, several conditions will need to converge. Regulatory guidance will have to become more consistent across jurisdictions so that global institutions can design frameworks that work in multiple markets, rather than on a patchwork basis. Risk management models, including stress testing and scenario analysis for assets like Bitcoin, must be refined and integrated into existing systems used for other asset classes. the ecosystem of service providers – from auditors and insurers to market data vendors and trading venues – will need to demonstrate reliability over time, giving institutions confidence that the digital asset market can support the same scale, openness and governance they require elsewhere in their portfolios.
As the industry awaits the next move from Washington,sacks’ remarks underscore how much hinges on the fate of the market structure bill. For now, major banks remain cautious, constrained by a patchwork of guidance and enforcement actions. But if Congress delivers the regulatory clarity he envisions,the long‑predicted convergence between wall street and the digital asset sector could accelerate sharply.
Whether that change unfolds on Sacks’ timeline will depend not only on lawmakers,but also on regulators,global competition,and how quickly institutions move once the rules are finally in place. What is clear is that the battle over crypto’s future in the U.S.has shifted decisively from the fringes of finance to the center of political and economic power - and the outcome may determine where the next era of financial innovation is built.
