The Role of Legacy Banking in WEB3 | Your Weekly R0AR ep26

Everyone in crypto loves to say “banks are dead.”

But are they really?

In this episode, Dustin and Brandon break down what actually happens to banks in a Web3 world. Instead of disappearing, banks may evolve into something entirely different—operators of financial infrastructure, liquidity providers for decentralized markets, and validators of trust in programmable finance.

We talk about:

Why self-custody doesn’t replace institutional custody

How compliance could move onchain

Why banks might become the backbone of Web3 liquidity

And what Banking 3.0 could look like

If Web3 is rebuilding the financial system from the ground up, the real question isn’t whether banks survive… it’s what role they play in the new system.

Weekly ROAR Podcast with Dustin Hedrick & Brandon Billings
Sponsored by https://www.r0ar.io/

Transcript

SPEAKER_00 0:01

Welcome back to the podcast. Today we're tackling a topic that a lot of people in crypto love to argue about. Are banks going to disappear in a web 3 world?

SPEAKER_01 0:12

Yeah, and spoiler alert, they're probably not.

SPEAKER_00 0:16

I know that's going to disappoint a few people on Crypto Twitter X.

SPEAKER_01 0:20

I know, right? We just made everybody mad at us. But the reality is Web3 doesn't kill banks, it forces them to evolve.

SPEAKER_00 0:28

So today we're talking about what banks actually become in a web 3 and blockchain-driven financial system. Let's start with the big idea. Banking 3.0.

SPEAKER_01 0:41

Yes. Historically, banks made money by doing three main things: holding your money, moving it around, deciding who gets credit. And let me just put in here also their ability to make that last as long as it needs to last, they get that time value of money, and you don't, especially when they're not giving you any APR on your returns.

SPEAKER_00 1:07

Yeah, which meant that they're basically the gatekeepers of the entire financial system.

SPEAKER_01 1:13

So blockchain changes that architecture of trust. Instead of trusting an institution to keep the ledger, the ledger itself becomes verifiable.

SPEAKER_00 1:23

So what happens to the banks then?

SPEAKER_01 1:25

Well, they stop being gatekeepers and start becoming infrastructure operators.

SPEAKER_00 1:31

That's quite a big shift.

SPEAKER_01 1:34

Yeah, it's it's huge. So in banking 3.0, banks look more like financial utilities. They run nodes, settlement systems, liquidity pools, things that keep the network functioning. In a truly, you know, profitable world for banking. They honest to goodness should move into a full ledgerized system like this.

SPEAKER_00 1:57

I guess this is the part where a lot of crypto people say, well, everyone will just self-custody.

unknown 2:04

Yes.

SPEAKER_01 2:06

Self-custody is it's actually one of the biggest innovations in crypto, I believe. Um the reality is, is most institutions and honestly a lot of individuals don't want the full responsibility of managing private keys, and that becomes problematic.

SPEAKER_00 2:24

Because losing a password is annoying, but losing a private key is catastrophic. And you yourself have a story about that. We won't talk about it.

SPEAKER_01 2:34

We don't talk about that. The wife doesn't let me. But banks can offer institutional grade custody with multi-signature wallets, insurance, recovery systems, compliance layers. The reason why I lost custody to mine is I burned a passphrase by accident in a Franklin Covey. And this ends that. Now, does it give the banks the full control of your wallet? No, it's sheer control, and that's why we even built RoarSafe like we did to make it best of class in that multi-sig space for what we had to do. We use it operationally, we believe in it.

SPEAKER_00 3:13

That's right. RoarSafe's one of my favorites. It's awesome. Um my favorite. Custody becomes optional instead of mandatory, then.

SPEAKER_01 3:22

That's right. It's a service you choose, not something forced on you. In the past, the gatekeepers have forced it on you, and with that layer and level of control, they've been able to hold the board. They own the board. There's no game we're playing. They own every move, every on, every off, every decision. So you're playing Monopoly, but you're not getting to move your own piece, and you're not getting to build, and you're not getting to buy. They're doing it all with your money, and they're building bigger buildings while you get.00001 cents for every thousand dollars you leave in the bank every month.

SPEAKER_00 4:03

Yeah, it's sad actually. Um, well, let's talk about regulation because that's always the elephant in the room.

SPEAKER_01 4:13

It's it's where banks are actually gonna become more important, not less. I mean, we're gonna see regulation come through governments, and we're starting to see things get clear. But now it's gonna become necessary.

SPEAKER_00 4:31

Do you want to talk a little bit more about that?

SPEAKER_01 4:33

Yeah, um, well, in traditional finance, compliance is enforced manually. It's paperwork, audits, and report reporting. In web three, compliance can be encoded directly into smart contracts. There's no opacity.

SPEAKER_00 4:51

So the rules become part of the software.

SPEAKER_01 4:54

100%. Banks could become things like compliance oracles, identity verifiers, and risk attestation providers instead of what they are right now. And that's hated.

SPEAKER_00 5:10

Meaning they help verify who is allowed to interact with certain systems.

SPEAKER_01 5:16

Yes, yes. And that enforcement happens cryptographically and transparently, while at the same time, as we're proving through what we're building in obfuscation layers and technology, ZK sync kind of thinking, that ability to create public privacy and private privacy that's not public that's automated and built into smart contracting.

SPEAKER_00 5:41

That's interesting. So another thing that banks bring to the table is something crypto always needs, and that's liquidity.

SPEAKER_01 5:49

Oh, yeah, lots of it because remember choke point 2.0 or whatever it was? Holy wow, you guys, when the bank said no, we won't let you buy Ethereum or we'll only let you move X number of dollars, and then we're we're working with like $50 is nothing inside a crypto world, whenever $50 could be your gas in Ethereum, just to run a smart contract. And you've got these folks saying we won't give you more than $50. They're the gatekeepers, they're the choke point holders. And now, with specifically what we're seeing with the Fed's move, the Fed's new move to allow the gateway function to work with crypto and Bitcoin and with the president's move indicating that he's never letting up on crypto because they took care of him during deplatforming, as well as let's go ahead and jump into Congress saying we're gonna put a bill out there that protects developers in this space and makes the U.S. one of the most central places for crypto and web three to be developed. You guys, it's looking good.

SPEAKER_00 6:50

It's true. Uh DeFi markets are global, but but they're fragmented and automated.

SPEAKER_01 6:56

Which means liquidity providers are critical. Banks have massive capital reserves and decades of risk management experience, and that matters. We're dealing with folks who've been coding in their mom's basement, some of them, and they don't understand risk management at the level that these experienced bankers do or investment leaders. And we need to honor that where it's due. We actually need their brainstore, their brain trust and infrastructure and smart contracting and automated systems.

SPEAKER_00 7:28

Right. So this isn't the Wild West anymore. It's not about dominating markets, it's about stabilizing them.

SPEAKER_01 7:36

Exactly. They're going to provide liquidity to decentralized and hybrid markets. They earn yield themselves while reducing volatility and having access to their brain trust offers an opportunity. Yes, we recognize that the banking system and legacy banking has scared the crud out of the technology that's built in. And so developers have control there. But on the other end, developers don't understand risk management and other pieces that the banking sector owns. So if we can come together in that magic middle, it's the best for all.

SPEAKER_00 8:06

Yeah. One of the biggest problems with traditional finance, too, is the settlement times.

SPEAKER_01 8:12

Right. I mean, people don't realize that a lot of financial transactions take days, weeks, or almost a business month. 21 days I've had something to wait, a business month to finalize, wire transfers, and more. Whereas in blockchain, things that used to take me seven days for a transfer, five days, three to finalize, they finalize in seconds. We're having in our solutions to turn them up in time because they finalize too fast for banks to feel comfortable. So we're having to alter things inside of chain dynamics so that banks feel comfortable there. Something that finalizes in less than three seconds can be scary when a bank is used to literally, they'll say standard, three to five days or seven to 14 days, or if you get a check held, up to 21 days. That's not a joke, that's reality. And so we have to build in the things that make it trustworthy to them for them to be able to do what they need to do in the 21 days in that three seconds to six minutes in finalization in blockchain. We're doing that.

SPEAKER_00 9:24

Yeah, I I mean that time frame sounds a little bit ridiculous in 2026, don't you think?

SPEAKER_01 9:30

Well, yeah, I mean it's painful for you and me. I mean, we we run a full business in blockchain, and our minutes are our finalizations like that. And we're everything across the world is done boom, boom, boom, boom, boom, and done, and expertly well, and uh with KYC involved or whatever, KYC, KYB. And then we go back to the bank, we're like, holy crud, transfer three to five days, God help us. Yeah, it's it's incredible. So blockchain flips that model, settlement becomes programmable, finality becomes cryptographic and almost immediate.

SPEAKER_00 10:03

Meaning you don't need three different intermediaries reconciling records.

SPEAKER_01 10:08

Exactly. Banks that integrate with smart contract settlement layers are gonna reduce costs and increase transparency. The thing that they're gonna want is their own sovereign structure, sovereign chains, or sovereign um finality. You know, they're gonna want that, and that's something we're aware of and working on.

SPEAKER_00 10:26

Absolutely. Uh, so here's the real question: what separates the winners from the losers?

SPEAKER_01 10:33

Adoption speed. That's it. That we are always talking about what does it take in blockchain to bring on the next billion users? That's a big deal. Well, now it's what does it take in legacy banking to remove the barriers to entry altogether, as well as speed of adoption? And so you can say it's gonna be education, but our thinking is can't just be education. So this is educational. It's got to be more than that. It's gonna have to be removing the barriers, making things one one click accurate, making sure they're ISO compliant, making sure that banks feel comfortable with them, they have the right auditing tools, making sure it's public where it needs to be and private where it needs to be, making sure that it has internal controls as well as external opportunity. And that's exactly the complexity we're excited about that we've built on.

SPEAKER_00 11:25

Absolutely. Uh, banks that adopt early then help shape the standards.

SPEAKER_01 11:30

Yep. If if you guys want to adopt early, you're gonna influence protocols, you're gonna influence the regulatory frameworks, and you're gonna influence how institutional capital enters the system altogether. And then the ones that don't, you don't want to know because honestly, they risk becoming simple access points to infrastructure they don't control. I can see a future where you've just got people using kiosks, almost like either uh, you know, going to your ATM, but not just going to your ATM to put cash in, but going to your ATM to put the cash in the bank to immediately have it converted to a crypto or translated some other way for transport across any protocol. And let me tell you something, people are leaning into the fact that we beat everything, including Swift, Visa, or whatever out there. Now, Visa has the thoroughput we don't have yet, but we're building that too. And it's we're close on a lot of things, man, actually, to being better and best of class on everything. So, speed of finality, we win. Thoroughput, maybe there's a lot. We got a lot to learn from MasterCard Visa, Swift's Mothers. But inside of framing for this future, it's already capable of doing everything that's necessary. And if banks don't jump on the ship sooner than later and start getting in, getting their feet in the water and taking the next steps. And I feel like financial advisors that are in the fee-on world or independent are gonna take these jumps and risks first. I believe they'll be first, and they'll become their own private banks out of it. Then these simple banks are gonna be replaced, they'll go away and become nothing more than an individual that's like an ATM putting things in blockchain.

SPEAKER_00 13:17

That's an amazing shift, actually. Um the takeaway here is pretty simple.

SPEAKER_01 13:24

Banks aren't disappearing, they're being redefined.

SPEAKER_00 13:31

And in a web 3 world, banks don't necessarily own trust anymore.

SPEAKER_01 13:37

No, they're gonna operate it, they will operate as trust.

SPEAKER_00 13:41

That's right. Uh, and the institutions that embrace transparency, programmable finance, and on-chain infrastructure will be the ones that survive the transition.

SPEAKER_01 13:50

Yes, exactly, exactly, exactly that. It's it.

SPEAKER_00 13:54

All right. Well, that's it today, everybody. Um, thank you for joining us, and we enjoyed the discussion of the future of banking in Web3. Make sure to subscribe and share the episode.

SPEAKER_01 14:05

You're gonna get more opportunities to see more white papers coming out of us. That is just a little bit of information from a lot of research and work we've done, and we're gonna be releasing multiples in this specific topic over the next weeks and months. You guys, it's here, it's time. We'll see you next time. Thanks for tuning in to your weekly roar. Thank you, everyone.