Citadel and Fidelity just made their clearest move yet to rebuild crypto like Wall Street
The plan: split the crypto stack like Wall Street
Okay, quick summary without the legalese: a Wall Street-flavored group that includes heavy hitters such as Citadel Securities, Fidelity, and Charles Schwab wants to build a federally supervised trust bank to handle custody, settlement, and other back-office chores for crypto trades. The idea is to pull custody and settlement out of the one-stop-shop exchange model and put them into a bank that regulators can actually poke and prod.
The proposal imagines a two-part setup. One piece—an exchange—would still match orders. The other piece—a national trust bank—would hold assets, manage fiduciary responsibilities, support settlement, and perform certain riskless principal activities. Instead of forcing institutional players to prefund every trade across multiple venues, the model favors end-of-day net settlement for spot trades and lets eligible participants post collateral rather than fully fund everything upfront.
They also plan to hand off some custody duties to sub-custodian banks that would be responsible for private keys, adding another layer of separation between trading venues and actual custody. Cash and stablecoin reserves would be parked in ultra-safe, short-term instruments aiming for returns near the federal funds rate, while supported digital assets might be eligible for staking or other permitted yield activities.
Why this could shake things up (or at least make institutional life easier)
Why should you care? Because this is less about crypto fandom and more about plumbing. Traditional financial markets are built around specialized roles—matching venues, clearinghouses, custodians—and many big institutions only play when those roles are spelled out and regulated. Crypto evolved with a lot of venues doing everything under one roof. That’s fast and handy in a bull market but brittle in a crisis.
If the trust-bank approach gains traction, it could change who holds the keys (literally), who controls settlement, and which firms become the go-to on-ramps for big institutional flows. A federally supervised custody-and-settlement layer could make crypto attractive to broker-dealers, registered investment advisers, futures commission merchants, and other regulated intermediaries who have been sitting on the sidelines because of custody, counterparty, and governance headaches.
There are practical reasons institutions might prefer this model. End-of-day netting and collateral flexibility can massively improve capital efficiency—less idle cash, fewer prefunding headaches, and a smoother operational profile. That matters for market makers and asset managers who care about inventory, execution speed, and the cost of carrying positions.
There are also regulatory nudges in the background. Banking rules and capital requirements can make direct crypto exposure expensive for banks, so a trust-bank wrapper that clarifies custody and settlement can change the economics for many players. Meanwhile, other firms are applying for similar charters, which suggests this could become a competitive layer of institutional crypto infrastructure rather than a one-off experiment.
Worth noting: the venue behind this filing has reported meaningful trading volume—company figures say around $36 billion cumulative in 2024—so this isn’t just a whiteboard exercise. Still, that number is company-reported and not an independent market share verification, so take it with the usual grain of skepticism.
Bottom line: this is an attempt to import the boring but reliable habits of mature market structure into crypto. If it works, the economic center of gravity could shift away from vertically integrated exchanges toward modular, supervised institutions that handle custody and settlement. If it doesn’t, exchanges will keep doing what they always did: winging it and hoping the servers hold up when markets wobble.
Either way, the next few rounds of charter approvals and whether real institutional flow follows will tell us if this is a tectonic shift or just another layer of paperwork. For now, consider it Wall Street trying to make crypto less wild west—and slightly more like the bank your parents mistrusted but also used for their mortgages.
