The news: The digital asset company (and federally chartered trust bank) BitGo has partnered with InvestFI to distribute digital asset trading to banks and credit unions.

How it works: InvestiFi’s platform allows bank customers to trade from their deposit accounts at banks that offer stock or crypto trading. BitGo’s contribution is crypto as a service (CaaS) infrastructure, which includes crypto trading, settlement, and custody.

Why it’s worth watching: InvestiFi initially offered embedded cryptocurrency trading in digital banking for community financial institutions (FIs). In 2024, it rebranded itself as InvestiFi and reduced its crypto emphasis in favor of embedded traditional investing tools. InvestiFI now claims to be the “the leading digital asset investment platform” for community FIs. It could very well be the only one: Crypto exchanges and big FIs have led that charge.

Crypto companies are entering banking, and banks are adopting cryptocurrency services. Crypto is increasingly accepted by mainstream holdouts, but community FIs’ involvement harkens back to 2022–2023, when banks close to crypto got burned and even collapsed. CaaS reduces the burden on community FIs to manage the complexity of crypto. But they are nonetheless responsible for vetting partners, who may be in businesses that bankers don’t understand.

Implications for banks: Embedded crypto investing effectively engages younger consumers, many of whom are interested in crypto investments and crypto-based payments. And it enables FIs to defend deposits as crypto platforms add banking products. FIs can quietly meet younger customers’ expectations by plugging investing into their digital channels.

But community FIs need to tread lightly, as crypto is increasingly mainstream but not fully regulated. The expertise required to run a crypto exchange sits primarily within digital asset firms. A renaissance in small-bank crypto trading may introduce more risk than reward.