Crypto banks are on the rise, slowly but surely. Now that people are slowly transitioning to put their money in Bitcoin and other cryptocurrencies than in banks, it is clear that this is the future and no one can stop it. If these banks are still against it, they would be left behind.
Most of the crypto banks these days are attracting their customer through high returns on their saving which might got really low when there will be more people willing to lend their money to traders. Majority of borrower in those crypto lending platforms or wallets are traders who want funds to trade with leverage and are happy to pay high interest for short term loans, those loans are not like long term bank loans therefore those high interest rate can't stay for long time.
Crypto banks can or never will be able to provide similar long term loans as they can't compete with interest rate banks are providing.
However yes regulation will help crypto to get better adoption right now.