Banking with Bitcoin & Digital Assets Built In | Bitcoin 2026

Good afternoon, everybody. How's it going out there? All right. All right. Uh, welcome to this is the panel on Uh, we tried to decide is this banks in the Bitcoin space or is this Bitcoin in the banking space? We'll talk this out. We'll answer both questions. And, um, really pleased to have the three gentlemen on the panel here today. I'm going to allow them to introduce themselves. Yeah, good afternoon. My name is Miles Paschini. I'm the CEO and co-founder of FV Bank. Uh, we're a digital bank that provides traditional banking services, digital asset custody, stablecoin, uh, on and off-ramps, and we're also a global Visa issuer. I'm Andrew Begin, Chief Strategy Officer at Galoy. We build core banking and payments infrastructure enabling community banks and credit unions to launch Bitcoin and digital asset-related products. Igor Elistratov, I lead digital assets at Fifth Third Bank. Okay, and by way of introduction, my name is Brian Hershfield. I, um, was an actuary and a quant for about 30 years. I wrote the book Bitcoin for Institutions, and I'm now creating a math academy called Magic Internet Math. Okay, so introductions are done. Let's get into it. Um, The Let's just like establish the first question is what is the state of the union? What is the state of the union with regards to banks and Bitcoin? Well, at FV Bank, we're open for business. I can say that. Um, I think that the demand for digital asset companies to get access to banking is still very strong, but I also think that it's, uh, still a very limited. There's 4,700 US banks. Um, I think that I could count on my hand less than 10 who actually provide services to the industry. So, I think the opportunity for growth is still quite amazing. Um and and just a lot of opportunity for uh banks to step in further and provide uh growth for this industry. I'll add that to that and maybe invert the question. You know, uh banks providing Bitcoin services, uh I'd say it's still very early. Uh been to the Bitcoin conference a number of times over the past four or five years and more over the past year I've been going to the banking conferences uh and speaking to a lot of community banks. So, a billion to 10 billion, 50 billion dollars uh about Bitcoin. Um you know, uh some of the findings have been interesting. Um stable coins uh is has reached a fever pitch. Um everybody's talking about stable coins and saying stable coins are going to chase deposits out of the out of the uh the traditional banks. Topic for another day or later in this talk. Um but there is a lot of um there's a lot of interest in Bitcoin. I'll say one more thing regarding the state of the sort of union in this space is that um there is no wedge between Bitcoin and crypto uh among a lot of bank executives. Um and personally speaking that wedge needs to be driven uh because uh I believe that um uh crypto is very big. The risk perimeter is is massive um and and with Bitcoin it's it's it's much smaller. Bitcoin is pretty simple um despite being a transformative technology. And so, um I I now that the regulation has shifted drastically in the past 18 months, uh I I'm really starting to see banks digging in in ways like they weren't 12 months ago. I agree with Andrew Luke. Uh Bitcoin is revolutionary uh and it was essential to to break into the financial system. But we have to start small. We have to start with some practical cases of adoption in the banking industry. And, they come from derivatives of the blockchain and blockchain network. Um and they come from the atomic settlement, traceability, uh the ownership, and uh the concept of the settlement and the visibility of the entire process on the transaction on the chain of the ownership. We have to start with the concepts and move to the full production pilots. And, I think the key is to make it very seamless for our clients. And, I agree with Andrew like we we treat Bitcoin and broader digital asset space um in a similar matter. Uh but, the practical adoption of Bitcoin comes from small steps where we treat them as a pilot, do the execution, and start introducing them through the existing experience uh of the clients today. So, they start getting the benefits of the digital asset space without shift of self-custodied wallets and exposure to the blockchain. And then, it comes from the practical adoption of the cross-border payments that are powered by stable coins. It comes from the atomic settlement. It comes from reducing of the pre-funding requirements. It comes from the reducing the dependency on the Fed wires and the cut-off times over the night and the weekend. And then, from there, we bring the digital asset stack closer to the banking industry and merge them together. Thanks, guys. Okay, so we've established really where we are. Here's my question now. Yeah, who's the who's the chicken and who's the egg? Is Bitcoin leading or are the banks leading all of this? I think that's a tough one to answer. Um I think that Bitcoin and banks is probably going to be most prevalent uh in in early stages in as a custodial asset or as a collateral. And I think that um that's going to drive the banks' interest because the question for the banks to be, why do I take on this additional uh you know, security vector risk? Why do I take on this additional compliance risk? Uh there's got to be a revenue mechanism for the banks to enter this space. So, I think that you'll see early adoption driving these activities in the bank because uh this is a new custodial asset that the banks can hold for the clients. Uh and most importantly, I think this is going to be the premium collateral in the industry. Um that's where FE Bank has really started with uh Bitcoin is providing digital asset custody and very soon providing uh collateralized loans. So, I think that's the entry point for most banks and I think that will be the driver. Um there is the pre-driver, which goes back, you know, in the early part of this industry was just providing essentially on-ramps and off-ramps to the digital asset marketplace. And so, that's bread and butter. You have to be able to provide, you know, traditional banking services so people can acquire or liquidate digital assets through fiat. Um and then after that, it goes into custody and lending, I think is the natural evolution. Yeah, I think it's really interesting. If we look back from over the past decade, crypto-native companies, Bitcoin-native companies have gotten all the benefits of interacting with the Bitcoin space. Traditional banks were told to stay out um directly during There was a panel just two panels ago called then they fight you. Um we know a lot of the stories of what had happened. Um and so, really it was like sort of a a two different parallel economies that that almost didn't touch. And so, um you had uh Bitcoin-native banks. You have companies like like River. You've got, of course, the big exchanges um that have been attracting people away from their traditional banking relationship. Um since say January 25-ish, SAB 121, there's been a long um series of of change in regulation and announcement that that where everything that used to be a red light, don't touch crypto, has been no, green light, America's going to be the crypto innovation hub of the world. So, now you're unleashing the banks to play in this space. Um there's a lot of interesting things that are happening. Um one of which is like stablecoin yield, and banks are saying, "Don't pay yield on stablecoins." There are banks that are leaning in and saying, "Look, we have all the money. We have 70% of the the deposits in the country. Uh we have, you know, smart teams. We can partner. We can offer services." Um and so that's where, you know, I I see this sort of the chicken and the egg. It's really an interesting competition because really the battle is for the customer of the future, right? And so the millennials and younger already own Bitcoin, and they're saying, "Mom, Dad, you're the ones with the money. Why don't you have Bitcoin yet?" Um and now the the the the handcuffs are off the banks to say, "You know what? We could offer us Bitcoin. We could like we're experts in lending. We're 200 years old. We've been keeping people's data and and secrets safe for 200 years. We can play in this space." So, I think the next 5 years are going to be super interesting as crypto-native companies get charters and try and, you know, take those customers away from the legacy banks, and then the legacy banks say, "You know what, uh young'un, uh we're going to we're going to come into this space as well, and we're going to do it really really safely and strongly." I agree with that, Luke. I think we have two instances of Bitcoin living in parallel. We have a universe of users that adopting Bitcoin through the self-custody wallets. They defined where the best execution coming from. They defined the settlement. They defined how the custody works. They get the best pricing execution. They defined where they get the market data. But that's not where the volume is coming in. The volume is coming in from the institutional players that are coming in into the game, and they defined the second instance of Bitcoin that live in the abstracted wrapper through the structured instruments, through the custodial wallets, through the financial institutions that are regulated by the OCC. And those two Bitcoins don't live the same life cycle. Like, they both permissionless by nature, but they operate in the two completely different universes that we set up right now. And they both drive the demand, but from two different sides. And I believe the next wave of adoption is coming from the banks. In the next 2 to 3 years, we're going to see more volume and more assets under management in Bitcoin holding under the banks and OCC regulated federally chartered banks than from the exchanges. All right. So, having said all that, okay, we have FV Bank, Galoy, Fifth Third Bank. Three bankers here. Why Why do we need you? Like, do we really need you? What What is What is the role? What is the role for banking here like you know, from like a Bitcoiners perspective. What do we need you people? Well, everybody in this room probably would like to see a million-dollar Bitcoin. And the only way you're going to get a million-dollar Bitcoin is more people buy it. And the natural on-ramp is fiat to digital asset. And where does fiat flow through in the world? It flows through banks. And so, um I think the very first step is that banks play a super important role in you know, access to acquire digital assets. Um you know, there's a myth that stablecoins just live on chain, for example. That's not really true. If you want to on-ramp or off-ramp from a stablecoin, uh in every instance, there's a bank involved in sending the fiat one way or the other. And so, I think at the very basic level, banks play an extremely important role in on-ramp and off-ramp. But I I agree with my co-panelists here that um as we move forward in this, banks will have a larger and larger role in custody because uh the 200-year legacy example, we you know, the the people that are going to come into this later in the game, they trust banks. And they trust the security, and they know there's audits and all of that. And so, I think that banks will play an extremely important role in custody, um an extremely important role in lending, but in the near term, it's still going to be access to on-ramps and off-ramps of fiat. Yeah, I building on that, um self-custody is paramount. It is it is it is necessary for the success of Bitcoin for people to be able to interact with the Bitcoin network. However, the next wave of adoption, as as Miles said, is coming from if you think about the Crossing the Chasm chart, the early majority. These are people that are less technical. These are our parents in many cases. A lot of folks in here are, say, under 50. And again, you might be telling your mom and dad, uh try you you guys should buy some Bitcoin. You're the ones with the money. There's big wealth transfer coming. Self-custody and and sovereignty is the final destination and should be available to everybody in the world, um but is not the safest first step into Bitcoin. We probably all know people who have lost their own keys. Um you know, we Now, AI can can hack our KYC processes that are online. Now, imagine like imagine what the future of a bank branch, like in person, might the role it might play in the Bitcoin network. Like, you can you you know, they know who you are. And you know what? You can have triggers that say, "Look, to spend the Bitcoin, I actually want to come into the bank, right?" Um or the use of even things like safe deposit boxes, which have gone out of style. I want to self-custody, you want to self-custody, but do you want to keep all of your key material in your house or buried in your backyard or do you want to have a relationship with a with a 200-year-old bank that's going to help you be self-sovereign where they cannot spend your Bitcoin, but they can help you. And I think that I'm very bullish, as you can tell, on banks enabling the next wave of adoption and getting people on board again, so long as that we maintain that sovereignty and self-custody is the final destination or available to all. I agree, Andrew. Uh And I think we banks act as trust anchors. And that is very important when we continue to see the growth from the institutions in adopting digital assets and blockchain because they expect the same controls, the same experience, the same risk management framework, reporting, auditability of the entire portfolio. And when they bring the digital assets to the existing services that they get from the banks, they expect the same experience. And that is very important because we're not trying to replace the financial systems with Bitcoin and digital assets. We're trying to modernize it. We're trying to fill the gaps in the experience that cannot be resolved for the traditional payment rails by implementing digital assets and the concept derived from the digital assets and the Bitcoin today. And that is going to be critical to scale it from where we are to the next two to five years to bring the next set of volume into the space from the traditional players, new players, and institutional players in the game. Yeah, thanks for that. You know, you brought up you guys brought up an interesting distinction because you know, when it comes to banks and trust, probably there's not a lot of trust when it comes to do they have the money? That kind of thing. Do they have the money to pay my to pay me back? But when it comes to can they hold the money, it yeah, I might trust a bank more than the current set of custodians that exists because that industry is really new. It essentially just arrived for and banks have been doing this for a much longer period of time. So, that's a very good that's a very good distinction. And then we have the the NGU, you know, we probably don't grow without without banks helping. We probably don't grow to the next phase. So, um Can Can I Can I build on that for a second? >> yeah. Um I think was it Cash App or Block announced proof of reserve yesterday? River has proof of reserves. Like there's there's math here, right? Like there's there's trust in a 200 or you know, institutions and then there's trust in in math and cryptography and like the blend of those is really powerful. And I think that again, the customer of the future is going to look at that and say, you know, with fiat, you know, the money in the bank is it is it is it yours? Is it theirs? Is it money? Um but but with Bitcoin, it's like you know it's money, you run a node, you can verify it's that that and then you have potential proof of reserves. And so I think that the banks that study Bitcoin, it's just like orange pilling your relative. Like just study it. Don't buy it, study it. Learn about it because there there is blue ocean as they say for like banks to to really do a great job. You have like FV, you've got banks that have been building all the way through the operation choke point that are now, you know, in great position. There's still a lot of open space for banks that, you know, to to to to make a lot of headway in the in the in the area. Yeah, and proof of reserves is a great um I'll say a great step. And just to be clear what it what it is is essentially a solvency test, right? Here's my pool of liabilities and here's my assets backing it and they they generally cover it, right? What it doesn't necessarily do is verify at the UTXO level necessarily that the banks where the the custodian is in full ownership. But it is a at least do they have the money? They're answering that question and that's a, you know, the current banking system isn't doing anything to answer that question, right? So I think Maybe maybe the future call reports will have a POR line on them. We'll see. That'd be amazing. I think it should and it it probably will. I mean it it there's a time horizon that we have to play with here. It's, you know, it takes takes a >> lot of time to get this stuff through, but I bet I bet there will. Maybe FB will be first. That's a great way to build trust. >> Maybe we volunteer to do that on in a in an >> Making an announcement right here? Unofficial. >> [laughter] >> Um so okay, so let me let's let's just get into a little bit deeper um you know, what are customers actually demanding of you? Right. What are customers really saying they want from What are Bitcoin customers saying they want from the banking system? I'm going to take that. Um it's really boring that that that the simple answer which is they need really good on-ramps and off-ramps so they can provide the access to buy and sell digital assets to their customers. I mean I think that's table stakes. You got to be good at it. Speed matters. A lot of people are turning their their capital over and so you know, speed, efficiency and reliability and and core banking is probably one of the most important things. I would say recently and growing in importance is stablecoin support. We've been supporting stablecoins directly to DDAs for for more than three years now. The ability to support on-ramps and off-ramps of stablecoins at the institutional level is super important because stablecoins have become the fuel on exchanges and OTC desks for counter trades. And so as a bank it used to just be you know, I need you to wire funds back and forth to counterparties in institutional trades. Now, it's uh large value, high frequency movement of stable coins, which is replacing in a lot of ways the fiat transaction. So, I think those those two things and that this is an inadvertent way of saying it helps Bitcoin, but it fuels the whole digital asset economy. Um and you know, and as you increase the velocity of that business and the efficiency of that business, uh which again is kind of boring, uh but it'll help the whole industry grow and that'll enable people to buy more Bitcoin, hold more Bitcoin. If you don't have that mechanism in place, which is, you know, a primary role that we play at FV Bank, then uh it's difficult to grow the market. Welcome to Predict. The [music] world is a market. Everything is a market. Every headline moves the line. Every moment is your market. [music] Call the moves. Bet on your instinct. Your prediction, your edge. Dual bets, predict, where everything is a market. Um I'll I'll speak again just from conversations with banking and community credit union execs. The customers aren't asking. They're they're quietly wiring money to an exchange out of their deposit account, and then that money's not coming back. Um and so you'd speak to a uh you know, CFO of a bank and they're like, it Bitcoin's not really on the radar of our board meetings, um but then when they dig enough into their data, they go, oh 10% 14% you know, there's a lot of money that's going out out. Um and and that and and so it's this what, soft switching or quiet quitting? Or it's like it it's this, you know, slow bleed, but again, uh now that the the handcuffs are off and the banks can participate directly, I there's a piece of data that I'm after. If anybody has it, let me know or we're going to go do the research on it, which is what is the delta between the people that are doing that today, are buying Bitcoin today, and the people that would buy Bitcoin if their primary financial institution threw up an ad in their in their beneath their savings account saying, "Would like to save in Bitcoin? Do it here." Simply, if you remove that friction of leaving and giving your passport and your and your address to to a third party that you don't know, how many more people that again, maybe less technical, a little bit older leaning, would actually participate in in buying Bitcoin? So, long winded way of saying they're not asking, they're just leaving and it'll continue to happen over the over the years. Um but I think that again, I think big I think banks are on the on the case. We see the demand in production grade for settlement and liquidity that clients expect to see in digital assets when they come to the banking services. As clients operate on 24/7 basis, they expect that the banks are going to be moving and building the back end stock to bring it up to speed with operational efficiency of digital assets and Bitcoin. And then we see the growing demand in capital markets business and post trade. As we continue to see the demand to grow for tokenized stocks, tokenized assets, they expect that the cash arm of that transaction is going to leave by the same rule. So, as we see that there is an increased demand for trading stocks 24/7, the expectation is that the cash is going to settle on 27 24/7 basis as well. So, we expect that digital assets not just coming into the banking, they're solving the banking problem by improving the liquidity, unlocking collateral, reducing the pre-funding requirements, and then making it more visible um by giving it straight through processing, programmability, and audit of the entire stack, not just the digital side of the transaction. They don't want to see the parallel workflow for the digital assets. They expect the entire banking flow is going to be merged to support the digital assets in the same manner as they support the other banking services today. Yeah, I I I just want to jump in. I think that's a great point. Like it at FV Bank when we introduced stable coins, we introduced them Monday through Friday, you know, from 8:00 to 9:00 from 9:00 to 5:00 p.m. when we first introduced them. And in the last year we moved to 24/7 settlement of stable coins. That was pushing the envelope. You have compliance considerations, operational considerations that you have to take into place, but I agree there's this expectation that if you know, if digital assets are moving at the speed of the internet, so should traditional banking. And so the the the banks that can figure out how how to crack that, if it's even possible, are are going to win. We are trying to to leverage what we can where we can to give a more fluid experience, but I do think that's an expectation. People say I settled, you know, $10 million in stable coin to you in 5 minutes. Where I want the wire out at the beneficiary in 5 minutes as well. That's an expectation. Nice. Oh, did I block the applause? Sorry. Um Thanks. Okay. So I think we have time for one more if we do it quickly. Um So instead of like asking you what the big challenge is ahead, I I I guess just let me know like what do you What is the next What's like the next big milestone for for the trajectory? I think we're all holding our breath for the Clarity Act. That'll that'll be an unlock for everybody to put their foot on the gas a little bit more. Um you know, for FV Bank, we're we're we're building. We're we're fintech. I mean, FV stands for fintech ventures. We've been building and building. And so our road map is ahead of some of the legal and regulatory hurdles that we have in front of us. So, a simple example is we built Bitcoin lending platform last year. We certified it this year. We're waiting for a couple legal and regulatory, you know, check boxes to be to be marked. And that'll unlock our road map for us. So, there's this ability to, you know, install software and test it and certify it. But then you've got to get the rest of the from a bank perspective, it all has to align. We can't operate purely like a fintech company and just build and deliver. There are there are gates and challenges that we go through. But it's happening. I can tell you it is definitely happening. That will be a milestone. I'm excited. Give it up for FV Bank leading the way right now. I think the reason I say that is because, you know, there's the adage like nobody wants to go first. And we know there's there's there's been people that have been battling this. It's been very difficult and they spent a lot of time and energy and they're paving the path on which the the next 8,500 financial institutions will be able to drive. So, I think that's big. The regulatory piece is big. And then also getting through like an election and and because I think a lot of banks are saying, "Okay, this is all well and good, but what happens should, you know, the administration change? Does all this just get completely yanked away?" And so, and I don't think so. I think that, you know, for me when SAB 121 went into for repeal in front of Congress and and they and and and Chuck Schumer and Cory Booker and all these Democrats walked across the aisle and said, "I am not standing next to that anti-crypto army bullshit." Like that was huge. And this is a bipartisan thing. So, I think that that that is a milestone though that will give people confidence. I agree on both points, but I just want to add I'm looking forward to add a little bit more standards to the industry because we do see a lot of talks today at the concept level, at the utilities level by building tokenized deposits and then they're evolving across different companies startups. But I don't see any live use case for interbank network in the near term. And I think the pinpoint there is that we have a lack of interoperability and lack of standards. And I'm looking forward to see how we going to align the messaging. I know it sounds boring, but I think it's very important to lay the foundation to bring the standards in ISO messaging and Swift messaging on chain to make the interbank interbank standards operate as this traditional payments operate today. Guys, thank you very much. Thank you guys very much. Thank you. Thank you. Thank you. >> [music] >> Every year this community comes together to celebrate to debate to build what comes next. >> [music] >> And every year the stage gets [music] bigger. Sound money center stage. [music] So, where do you go to celebrate the next chapter in Bitcoin history? You come home. >> [music] >> Nashville, July 2027.