Victor Ugochukwu · Dec 14, 2020 . 5min read
US Banks can now offer Crypto Custody Services
This marks a major milestone for cryptocurrencies as this was the exclusive reserve for custody giants like Coinbase.
By Victor Ugochukwu · Jul 24, 2020 . 6min read
Any US bank created by public charter can now offer crypto custody services, says the Office of the Comptroller of the Currency (OCC) as reported.
This marks a major milestone for cryptocurrencies as this was the exclusive reserve for custody giants like Coinbase. In the letter, Senior Deputy Comptroller and Senior Counsel for OCC, Jonathan Gould explicitly stated this. Any national bank can hold onto the unique cryptographic keys for a cryptocurrency wallet, clearing the way for national banks to hold digital assets for their clients.
The OCC is currently headed by a former Coinbase executive, Brian Brooks. He joined earlier this year and has been functioning within an acting comptroller capacity. His tenure is already looking good for the cryptocurrency industry with various policy reforms he is proposing for the OCC.
With the growing interest in cryptocurrencies, this may be another profit-spinning enterprise for US banks as they “may offer more secure storage services compared to existing options” the letter notes. No one should underestimate this. Clearly, the risks of either losing your private keys makes this important. Equally, hackers and the somewhat irreversible nature of cryptocurrency transactions makes this even more crucial. Little wonder OpenAI’s GPT-3 dual recommendations for cryptocurrency mass adoption includes this. Specifically, one of which is the safekeeping of fund which banks can now help users to achieve.
Providing custody for cryptocurrencies would differ in several respects from other custody activities,”
Regulators recognize technology and financial innovation goes hand in hand
OCC also shares its perspective on banks’ roles as financial markets see growth due to growth in technological innovations.
“The OCC recognizes that, as the financial markets become increasingly technological, there will likely be increasing need for banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers,” the letter states.
Legal cryptocurrency firms may walk up to any bank for its crypto custody services
OCC’s new policy empowers any legally operating cryptocurrency firm that seeks any US bank’s crypto custody service to get it. Moreso, without any barrier. The letter vividly “reaffirms the OCC’s position that national banks may provide permissible banking services to any lawful business they choose, including cryptocurrency businesses, so long as they effectively manage the risks and comply with applicable law.”