The news: LevelField Financial, a crypto-friendly “bank” without a bank charter, has obtained conditional state approval to acquire Burling Bank, a state-chartered Chicago community bank with $206 million in assets. The merger, if approved by the Federal Reserve, will hand LevelField a banking charter, allowing it to offer credit cards and loans collateralized by Bitcoin, cards with Bitcoin rewards, and digital asset custody and trading.

Trendspotting: The scope of the combined entity would be similar to Erebor, a digitally and crypto-native bank that serves companies in sectors like crypto, AI, and defense and manufacturing—as well as the high-net-worth individuals tied to them. In October 2025, the Office of the Comptroller of the Currency granted Erebor conditional approval for a national bank charter.

LevelField’s intended acquisition is similar in effect to moves by other nonbank crypto companies. Crypto investment platform Kraken acquired a Wyoming special purpose depository institution (SPDI) license in 2020. The SPDI charter process preceded by several years substantive federal regulation covering digital assets and the following wave of federal trust bank charter applications by crypto companies. Both tactics allow companies to custody digital assets and fiat deposits.

Our take: Crypto-friendly and crypto-native banks are increasingly operating like traditional banks. It’s in stark contrast with two years ago: Silvergate Bank, which was tied closely to the crypto industry, collapsed in 2023 amid a large-scale crypto meltdown. And the late-2022 bankruptcy of FTX, 2023 bankruptcy of Genesis Capital, and instantaneous collapse of Silicon Valley Bank rocked the market. With unstable crypto companies weeded out and regulations in place, crypto and the traditional banking system are merging.

This trend should unnerve financial institutions that are tied solely to traditional banking. Banks reportedly shunned crypto companies after that market fell apart, and they may be hesitant to dip their toes back in. That would be a mistake: As crypto firms acquire banks or receive bank charters—and as banks build crypto-related businesses—the lines will blur between legacy and decentralized financial systems. Banks must eventually be prepared to do it all.