Digital asset-focused fintech firm LevelField Financial has announced it has secured conditional regulatory approval to acquire Chicago-based Burling Bank. This development represents one of the most significant crypto-banking acquisitions in recent months.
If the acquisition is finalized, LevelField could become the first Federal Deposit Insurance Corporation-insured chartered bank to offer certain crypto-integrated banking services across all U.S. states and territories. LevelField stated this in a press release on Monday. The specific financial details of the deal were not disclosed.
The approval from the Illinois Department of Financial and Professional Regulation brings Burling Bank closer to being renamed LevelField Bank. The parties involved are still awaiting final approval from the Board of Governors of the Federal Reserve to establish a bank holding company.
The proposed LevelField Bank aims to provide comprehensive crypto-banking services available 24/7/365. These services are expected to include Bitcoin-backed loans, Bitcoin rewards credit and debit cards, as well as digital asset trading and custody solutions.
Burling Bank is a smaller commercial bank, reporting approximately $196 million in net assets and around $158 million in customer deposits, according to Visbanking data.
LevelField intends to focus on serving businesses in under-banked sectors, leveraging the security and regulatory framework of the U.S. banking system, according to CEO Gene A. Grant II.
“Today's approval is an important milestone for LevelField. I am grateful to our investors and partners for backing the patient, disciplined work it took to meet the necessary supervisory standards that protect consumers and businesses and make the US the home of the world leading banking system."
Tense Relationship Between Crypto Industry and Banks Persists
This acquisition further strengthens the connection between the crypto and banking sectors in the U.S., despite ongoing friction that continues even with a recent increase in institutional adoption.
For instance, U.S. banking groups have voiced concerns that the widespread adoption of yield-bearing stablecoins could lead to significant deposit outflows from the traditional banking system. These deposits are crucial for banks to fund loans and offer competitive savings products.
Potential for Large Deposit Outflows Due to Stablecoins
These concerns are supported by the U.S. Treasury Department, which estimated in April that the broad adoption of stablecoins could potentially result in over $6.6 trillion in deposit outflows from the traditional banking system.
The Federal Reserve also maintains a cautious approach towards cryptocurrencies. This stance has been influenced by the failures of crypto-friendly banks such as Silvergate Bank, Silicon Valley Bank, and Signature Bank, which either went bankrupt or were forced into liquidation in early 2023.