President Trump signed an executive order on May 19, 2026, mandating a government review of rules affecting fintech and crypto partnerships with banks, creating immediate pressure for traditional financial institutions to adopt digital assets. BitGo's director for Latin America, Luis Ayala, described this as a 'wake-up call' for institutions still sitting on the sidelines, stating that 'this forces banks to transform faster and to take Bitcoin and blockchain seriously.' The executive order directs regulators to facilitate digital asset inclusion in traditional finance and payment systems, including opening the door for digital asset companies to access Federal Reserve master accounts - the privileged infrastructure that has historically been reserved for traditional financial institutions. This mandate arrives alongside the Senate Banking Committee's advancement of the Clarity Act, creating a dual regulatory push that traditional banks cannot ignore.
The CLARITY Act has successfully advanced from the Senate Banking Committee to the Senate floor for broader debate, with all 13 Republican members voting to advance the legislation. However, the vote revealed significant partisan divisions, as all but two Democrats voted against, with only Senators Ruben Gallego and Angela Alsobrooks joining the Republican majority. Committee Chairman Tim Scott announced a 'successful bipartisan markup' after nearly a year of negotiations, though Senator Jack Reed disputed this characterization, stating that Republicans 'arbitrarily dismissed Democrats' concerns' about crypto enabling crime and the president's use of crypto projects for personal enrichment. The minority released a brief outlining concerns that the current version fails to adopt global anti-money laundering standards, exempts DeFi protocols from financial standards, and doesn't close loopholes for crypto mixer services.
The CLARITY Act provides critical banking relief by authorizing banks to engage with decentralized ledger technology without counting custody assets as liabilities on their balance sheets. This addresses the previous accounting treatment that required banks to record custodied crypto as liabilities paired with offsetting assets, making digital asset custody appear far more expensive and risky on paper than it actually was. The legislation will 'end the regulatory ambiguity' faced by American crypto consumers and industry participants by clearly defining when a token is treated as a security, when it is a commodity, and which agencies are responsible for enforcement. The bill seeks to give businesses the legal certainty they have been demanding, allowing them to know how tokens are classified, what disclosures are required, and which agencies they will answer to, from the Securities and Exchange Commission to the Commodity Futures Trading Commission and banking regulators.
While US banks digest the new regulatory landscape, Latin American counterparts are actively exploring digital asset strategies, with several major institutions in the region actively exploring digital asset capabilities. According to Ayala's comments, major institutions including BCP Peru, Santander, Tower Bank, Itaú, BTG Pactual, and Banco de Crédito de Bolivia are exploring digital asset strategies. BitGo is positioning itself as the infrastructure partner these banks need, specializing in institutional-grade digital asset custody and compliance. The access to Federal Reserve master accounts for digital asset companies would be transformative, allowing institutions to settle payments directly through the Fed's systems bypassing correspondent banking relationships that have historically served as chokepoints for crypto firms.
Ethics has emerged as a politically volatile and important sticking point as the bill moves to the Senate floor, with progressive critics raising concerns about potential conflicts of interest. Ryan Cooper from The American Prospect suggested that Democrats who voted with the crypto industry 'ought to be primaried,' stating that 'allowing yourself to be bought by the crypto lobby is unforgivable.' The Congressional Progressive Caucus announced opposition to any bill that could 'allow the President and his family to enrich themselves, engage in corruption, and sell access to the White House through cryptocurrency.' Despite these concerns, the crypto industry remains largely optimistic, with Javier Martinez of sFOX calling the vote a 'major step toward resolving crypto's regulatory identity crisis in the United States.' Ji Hun Kim of the Crypto Council for Innovation stated that 'CLARITY will ensure that our country leads when it comes to digital assets policy and innovation.'
