Probably they fear that if people hold the mass amount of crypto and wanted to convert it to cash then it will be a problem those banks have low cash holdings. Considering the significant price increase in Bitcoin and other cryptocurrencies it will be hard to pay them back if they want to take their cash out. This can be considered a major problem.
That is exactly what they fear! In crypto if you own crypto you can buy more or sell and it is always there, there is no "money lost" there, you buy a certain amount of bitcoins and you sell certain amount of bitcoins, there could never be more or less amount in the world.
So, why can't banks handle that? Simple reason, because they do not have the money they claim they do, that has been known for years and world didn't just crashed the whole banking industry, I do not know why and I can't say how but the reality is that we put money into banks, and they spend that and if every single person that has money in that bank wants to withdraw it, that would result with them collapsing and not being able to pay, that is basically means banks are a ponzi scheme surviving with the new money coming in. Crypto doesn't allow that and financial industry hates it for that.