Washington has started the clock on bank-issued crypto dollars, and the timeline contains a 2026 Bitcoin surprise

Next year’s first quarter could prove kinder to Bitcoin than late 2025, not because bank-run stablecoins arrive overnight, but because the pipes feeding retail and advisors just widened.

Vanguard reversed its crypto ban, opening spot ETF access to roughly 50 million clients. Bank of America advisors can now recommend crypto allocations of 1% to 4% starting early January.

Meanwhile, the FDIC’s Dec. 16 notice of proposed rulemaking under the GENIUS Act starts the clock on bank-issued stablecoins, a structural shift that could reshape dollar-based rails on public chains later in 2026.

The timing defines the narrative. Distribution changes land in January, and regulatory infrastructure for federally supervised stablecoin issuers takes shape over 12 to 18 months.

The first quarter becomes a story about wealth-channel expansion meeting favorable seasonality, while the NPRM telegraphs where the next wave of on-chain dollar liquidity originates.

Wealth distribution opens wider

Vanguard’s reversal matters because of scale. The $11 trillion asset manager spent years blocking exposure to crypto. In early December, the firm dropped that stance, allowing clients to trade third-party ETFs and mutual funds that hold Bitcoin, Ethereum, and other digital assets.

Access for 50 million investors worldwide represents meaningful retail addressability even as Vanguard refuses to launch its own crypto products.

Bank of America’s guidance operates differently but reaches a similar endpoint. Starting Jan. 5, wealth advisors at Merrill and the Private Bank can actively recommend crypto ETPs rather than merely executing client-initiated trades.

The bank steers suitable clients toward allocations of 1% to 4% in major US Bitcoin ETFs. The conservative penetration implies tens of billions in addressable wealth that previously sat locked out.

This is not guaranteed inflow. Model portfolios move slowly, and compliance reviews filter who gets pitched. Yet, the infrastructure now exists for traditional savers to access crypto through channels that were closed until this quarter.

The marginal buyer in early 2026 looks less like a levered crypto fund and more like a retirement account, adding a 2% BTC position.

Seasonality favors the first quarter with caveats

Historical patterns support the setup. Since 2013, Bitcoin has delivered an average return in February of mid-teens, with negative February rare. March trends are similarly positive.

Average returns for the first quarter are above 50%, making it typically the second-best quarter behind the fourth quarter.

However, this year broke the pattern, with the first quarter finished down 12%, Bitcoin’s worst first quarter in a decade, as investors sold into macro uncertainty despite halving narratives and ETF inflows.

Seasonality is a tendency, not a law. The difference this time is that positioning feels cleaner, and sell-side targets have reset lower. Standard Chartered slashed its year-end 2025 forecast from $200,000 to roughly $100,000, and its 2026 target from $300,000 to $150,000.

Analysts cite weakening demand from digital asset treasury stocks and an outlook where upside depends on steady ETF inflows rather than corporate treasuries levering up.

Rallies are grindier and more sensitive to flows, fees, and access, which is exactly where distribution pipes matter most.

What the FDIC proposed under GENIUS

The Dec. 16 rulemaking is narrowly scoped. It establishes application procedures for FDIC-supervised state banks seeking to have subsidiaries issue “payment stablecoins” under the GENIUS Act.

Key elements include tailored applications evaluated on statutory factors: reserve maintenance, capital and liquidity, risk management, governance, and redemption policies.

GENIUS defines payment stablecoins as digital assets used for payments that issuers must redeem at a fixed monetary value. The Act requires 1:1 backing with high-quality reserves, detailed public disclosures, and monthly reports prepared by an accountant.

Rehypothecation is banned except in narrow circumstances.

Timing determines why this is not a driver for the first quarter. The NPRM opens a 60-day comment window, and GENIUS itself doesn’t activate until Jan. 18, 2027, or 120 days after final implementing regulations, whichever comes first.

Even in an aggressive scenario, late 2026 is the earliest realistic launch window for FDIC-supervised bank subsidiaries to deploy on-chain dollars.

Bank stablecoins reshape liquidity, eventually

The GENIUS framework points to dominant dollar tokens issued by insured bank subsidiaries on public chains under unified federal rules.

If even a few large banks take that path, they could bring cheap, programmatic dollar liquidity to the rails on which Bitcoin trades.

Stablecoins issued by bank subsidiaries could serve as collateral or settlement assets for ETF market makers and prime brokers, tightening spreads and deepening derivatives markets.

The difference between today’s offshore-dominated stablecoin landscape and a world where major banks issue federally supervised on-chain dollars changes who trusts the tokens, who can hold them in custody accounts, and what those tokens enable in institutional workflows.

But none of that affects Bitcoin prices for the first quarter. The NPRM is a regulatory milestone signaling where the next wave of on-chain dollar liquidity could originate, not a switch that flips in January.

Distribution math over narrative

The story for the first quarter is simpler than the late-2026 one. Vanguard’s 50 million clients and BofA’s wealth advisors represent boring distribution math: how many accounts add 1% to 2% BTC positions, and how much capital moves?

Seasonal patterns suggest February and March should skew positive, but 2025 showed those patterns can fail. Street targets have reset lower, so rallies depend more on measurable inflows than momentum-chasing.

The FDIC’s GENIUS rulemaking runs in parallel with the structural track. It won’t boost liquidity in the first quarter, but it defines what on-chain dollar markets could look like in 2027 if the cycle holds.

Bank-issued stablecoins supervised under federal rules, usable as settlement instruments, and integrated into ETF workflows, are the infrastructure play underpinning the next leg, assuming macro conditions cooperate.

The next quarter tests whether distribution expansion and seasonal tailwinds stabilize Bitcoin after a rough late 2025.

The GENIUS proposal tells what comes next if that test succeeds: federally supervised on-chain dollars that turn public blockchains into credible settlement layers for institutional capital.

Whether Bitcoin threads that needle depends less on headlines than on how many Vanguard clients click “buy” in February, and whether banks that could issue GENIUS-compliant stablecoins actually decide to build them.