The global financial system is at the crossroads, with an increasingly erroneous regulatory orientation between the traditional bank and the cryptography sector. While traditional banks are faced with systemic sub -regulation – exacerbated by unresolved vulnerabilities – cryptocurrencies are subject to an excessive crisis which risks stifling innovation. This imbalance creates a paradox: one sector is dangerously exposed to instability, while the other is chained by excessive prudence.
The traditional sub-reglemented banking system
Recent banking crises, such as the samples of 2023 from Silicon Valley Bank, the signature bank and the First Republic Bank, underline the fragility of traditional banking systems. These failures were drawn by liquidity risks, poor management of capital and regulatory gaps, in particular in the United States, where partial deregulation contrasts with global trends towards stricter surveillance (1). For example, SVB’s dependence on uninsured deposits and its exemption from certain liquidity regulations left it vulnerable to rapid withdrawals of deposits when interest rates increased (3).
The reforms of the post-globale financial crisis (GFC) as Basel III and the EU CRR 3 prompted banks to adopt integrated risk models and real-time data frames (1). However, these measures remain insufficient to remedy the emerging threats such as cyber attacks, governance challenges focused on AI and the risks of commercial real estate portfolios (2). The 2023 disorders have revealed that even with post-GFC reforms, traditional banks do not have resilience to resist macroeconomic shocks, in particular in a post-country environment marked by digital transformation and non-banking financial intermediaries (3).
The too balliped cryptography sector
On the other hand, the cryptography sector is regulated with a level of intensity which often ignores its emerging stage. While traditional banks operate in mature frameworks, cryptographic platforms are faced with fragmented and scalable rules, such as the “Crypto Project” of the American Sec and the EU (2) Mica Framework. These regulations aim to process consumer protection, anti-delated money laundering (LMA) and environmental concerns, but often lack nuances for the unique risks of the sector, such as volatility and decentralized governance (1).
The regulatory discrepancy of 2025 – executed by the lifting restrictions of the occurrence of the United States to the cryptographic engagement of the banks – indicates an evolution towards integration (3). However, this transition introduces challenges of conformity, because institutions must navigate in the advanced analysis of blockchain and LMA frames (3). Meanwhile, the Bank for International Settlements (BIS) is considering a new generation monetary system taking advantage of the tokénisation to unify the central bank reserves and the money from the commercial bank (4). However, such an innovation is hampered by regulatory overcoming, which favors caution in relation to experimentation.
Implications for investors
The poor allocation of the regulatory objective has deep implications for investors. Traditional banks, sub-regulated and exposed to systemic risks, remain vulnerable to crises that could erode confidence in the financial system. Conversely, the sur-scutination of the cryptographic sector can dissuade innovation, delaying the production of blockchain potential in fields such as cross-border payments and asset tokenization (4).
Investors must carefully weigh these dynamics. While the traditional bank offers stability, its subregulation has long-term risks. Meanwhile, Crypto’s regulatory obstacles create uncertainty but also opportunities for the first adopters who can face the challenges of conformity. A balanced approach – support for innovation in crypto while strengthening surveillance in traditional banking services – is essential to mitigate allocation errors and promote a resilient financial ecosystem.
Source: (1) Three crises and financial lessons for the future (https://www.fdic.gov/news/speesches/2025/three-financial-cises-and-lessons-future)(2) Blockchain’s regulatory landscape: analysis (https://www.scivendirect.com/Science/article/pii/s2772485925000274)(3) How regulatory changes redefine the future of the bank and the crypto (https://www.privatebankerinternational.com/features/how-gulatory-shifts-are-defining-the-future-of-fanking-and-crypto)(4) III. The new generation monetary and financial system (
