As demand grows, community bankers will be compelled to take a closer look at crypto

Will cryptocurrencies ever be a good fit for the community banking model? It’s been some time since I used this space to explore this question, and the ground has shifted quite a bit since then..It’s completely understandable why a big swath of community banks would still prefer to ignore crypto. These digital assets are still risky, complicated, and not exactly compatible with traditional banking models. But crypto adoption has accelerated among businesses and consumers. Do community banks that decline to offer crypto-related services risk losing customers, revenue opportunities and cede ground to competitors?These questions remain unanswered. While challenges exist, community banks should still be keeping a close eye on this wild yet expanding market and at least researching ways to get involved.I’ve been tepid on community banks embracing crypto for a long time. But a year ago, (Jan. 23, 2025), President Trump signed an executive order titled “Strengthening American Leadership in Digital Financial Technology” that established a policy to “support the responsible growth of digital assets, blockchain technology, and related technologies across all sectors of the economy.” While not yet a law, signs like this coming from the top end of the federal government demand more attention, like it or not, to the steady march of crypto into the world of banking.One thing to keep an eye on is customer demand. The demographics of crypto ownership is expanding beyond a niche interest of tech enthusiasts. Surveys indicate that roughly 20 to 25 percent of American adults now own some form of cryptocurrency. The National Cryptocurrency Association and Harris Poll survey found that 21 percent of U.S. adults (about 55 million people) own cryptocurrency. This poll indicates younger customers — a demographic community banks will need to attract — show particularly high adoption rates. Millennials and Generation Z expect their financial institutions to accommodate digital assets alongside traditional banking services.To be sure, a survey touted by a growing crypto association should be scrutinized. I myself “feel” that percentage is a little inflated, but maybe not by much, and it’s not going backwards. It remains hard to get beyond feelings when it comes to crypto because the numbers surrounding it remain volatile. But one prediction is community banks that refuse to engage with crypto risk telling a significant portion of customers that they won’t address their financial needs. This type of customer isn’t going to abandon crypto. Instead, they may take their entire banking relationship elsewhere, moving deposits, loans and what-have-you to a bank that will manage their full financial portfolio.Of course, crypto must be a revenue opportunity for a community bank or what’s the point? Custody service, or securely holding crypto on behalf of a customer, could command premium fees reflecting the expertise and trust community banks work so hard to build. As the regulatory framework matures, more opportunities for safe crypto-backed lending will emerge. Not enough data exists right now to prove a revenue stream for this service is available to community banks because, well, at this moment only a few small banks have taken the plunge so far. A 2025 study from American Banker shows that among community banks surveyed, only 5 percent were offering custody services for public cryptocurrencies.Business customers may be the first to compel community banks to consider crypto services and, to give one example, agriculture customers are pushing the option forward. It’s still early going, but farmers are starting to use crypto for international sales and investment revenue. One farm in Arizona, Oatman Farms, has started an initiative to help other farms maximize crypto’s potential as an investment to draw from as needed. Oatman is a small-scale organic farm that says crypto investment has helped keep them afloat.Is it for everyone? Who knows. The number of early adopters is growing, like a crop. Again, this is something for every community bank to keep a close eye on.Community banks thrive on their cautious and stable approach to servicing their communities. Cryptocurrency is no longer an exotic risk to totally avoid. Polls and data have yet to paint a comprehensive picture, but a common theme is customers of all kinds are starting to expect crypto services. Risk management, staff training and technology infrastructure all need to be thoughtfully addressed. That’s really not much different than business as usual for a community bank.Many concerns on the subject rightfully remain but it’s no longer whether community banks should engage with crypto, but how quickly they can do so responsibly and in a way that is a good fit with the bank’s existing commitment to its customers.