Written by: Bel Gates
What exactly is WEB 3.0 banking? Today I will give a definition.
This is not a simple popular science article, nor is it an overview to hype the industry. You may have already come across: the U.S. has passed the GENIUS Act, Hong Kong has issued stablecoin licenses, and there is a LEAP Policy 2.0, with the entire RWA rapidly migrating on-chain. But these are not the focus; the focus is — behind these actions lies the emergence of a brand new financial infrastructure, and its core role is the WEB 3.0 bank.
Many people still linger on the concept of 'digital banking', thinking that a usable app and smooth experience is an evolution. In fact, that is just the Web 2.0 version of traditional banks, and the essence hasn't changed — it is still centered on fiat currency, account systems, and authority control in the hands of the bank. It addresses the 'service experience issue', but cannot solve the 'structural trust issue'.
We no longer need to discuss the issues of banks; every user has already voted with their feet: slow, expensive, closed, uncontrollable. Traditional banks are like large shopping malls, with complex processes and fees everywhere, while today's users want a 7-11: open anytime, instantly usable, accessible to everyone. This is not a slogan; it is a turning point in product thinking.
However, what truly breaks this old framework is not user complaints, but the rise of on-chain assets. When stablecoins become the default currency for transactions, when RWA brings traditional bonds on-chain, when exchanges, Web 3 communities, and DeFi protocols all start managing user assets, the core moat of banks — asset custody rights — is rapidly losing its effectiveness.
The transformations that will occur next are irreversible. More and more Web 3 institutions are holding assets, but their users still need to consume with fiat currency: buying groceries, paying rent, swiping cards, withdrawing cash. This raises a new question: how to safely, legally, and conveniently convert on-chain money to the fiat world?
The answer is not to go back to traditional banks, nor to rely on exchanges fighting alone, but to create a new infrastructure: WEB 3.0 banks.
I am now providing a clear definition:
WEB 3.0 banks are protocol platforms that empower Web 3.0 institutions with banking capabilities, allowing any project with assets, users, or tokens to serve users like a bank, without having to become a bank themselves.
It is not a banking license, not a financial company, and certainly not a card-issuing app. It is a pluggable banking capability system that modularly provides issuing, VA account creation, currency exchange, global settlement, fiat withdrawal, KYC, AML, and other capabilities. It is not a C-end product but a B-end infrastructure; it does not issue accounts but empowers accounts; it does not hold funds but builds bridges.
You can understand it as 'Bank-as-a-Protocol'. Just as blockchain has made value programmable, WEB 3.0 banks have made financial services into composable and integrable capability modules. It allows RWA platforms to accept and pay fiat, enables exchanges to transfer money to users, allows Web 3 communities to pay creators, and lets gaming projects issue payroll cards — things that only banks could do before can now be done by any project.
For instance, a user of a DeFi protocol might have all their assets locked in the protocol earning yields, but they still need to keep a portion of fiat in their bank account for rent, utilities, tuition, and other fiat expenses. This fragmentation of assets is a common pain point for all DeFi users today. But when that DeFi protocol connects with the WEB 3.0 banking system, the situation changes. Users can directly use consumption cards issued by the protocol to spend their on-chain assets, with the system automatically performing conversion settlement in the background, while the VA account supports receiving and sending fiat at any time, making global transfers no longer reliant on traditional bank limits and procedures. This means users no longer need to preemptively 'withdraw and hold', as on-chain funds are always available, significantly enhancing user experience. More critically, once these functions are smooth enough, users will be more willing to invest more fiat assets into DeFi because they know they can use them whenever needed, rather than having to keep them in a bank account.
For example, a Web 3 application with its own token, in the era without WEB 3.0 banks, when users want to consume or transfer, they usually have to withdraw tokens in bulk to exchanges, sell them for USDT or fiat, and then transfer them out for consumption. This process is not only cumbersome but can also trigger concentrated selling pressure, causing systemic downward pressure on token prices. However, if this application integrates with the WEB 3.0 banking system, users can directly call tokens when they need to consume or transfer, automatically converting to the required fiat at real-time exchange rates to complete payments, with the entire process being seamless, eliminating the need for concentrated selling. This not only greatly reduces the operational threshold for users but also extends the period that tokens remain in the system, significantly alleviating market liquidity shocks, and even fundamentally changing the project's understanding of 'selling pressure' risks.
More importantly, once the capabilities of WEB 3.0 banks are fully open, the biggest beneficiaries will be every Web 3 merchant. They will no longer rely on the banking system to hold customer funds but will fully manage on-chain assets autonomously and complete consumption, settlement, withdrawal, and transfer — tasks that only traditional banks could perform. This means merchants are no longer just payment tools but 'micro-banks'. Settlement efficiency will increase exponentially, service scope will globalize, fiat currency types will switch freely, and user experience will be extremely smooth. Financial services will transform from 'centralized bank counters' to 'modular service capabilities', which will completely accelerate the infrastructure upgrade of the entire crypto industry.
Conversely, the true Achilles' heel of traditional banks is also laid bare — as WEB 3.0 banks make more users willing to hold and spend crypto assets, merchants will naturally begin to actively accept crypto payments. At that point, the on-chain 'receiving + spending' closed loop will gradually replace fiat intermediaries, and traditional banks will lose their cash circulation scenarios that they rely on for survival. This is not replacement but eradication.
What WEB 3.0 banks aim to achieve is not to become a super bank, but to enable countless Web 3 merchants to possess banking capabilities. What it needs to do is to deconstruct banking from an institution into a protocol. It is not about building a new bank, but redefining what a bank is.
Therefore, this revolution empowers every Web 3 merchant, and it is the life of traditional banks that is being changed.
This is the era that the WEB 3.0 bank is about to be born into, and it is also the life it is about to change.