On July 22nd, an impartial bureau of the United States Treasury, often called Office of the Comptroller of the Currency (OCC), issued a public letter clarifying that nationwide banks and federal financial savings associations are legally permitted to have custody of cryptocurrency property.
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In different phrases, US banks have the suitable to supply storage providers for cryptocurrencies.
Fortune reported that the OCC letter, which was addressed to an unnamed US monetary establishment, “also opens the door for banks to offer more exotic services”, together with staking and cryptocurrency lending.
Providing cryptocurrency providers is a “modern form of these traditional bank activities.”
Regarding custody, the letter mentioned that “national banks have long provided safekeeping and custody services for a wide variety of customer assets, including both physical objects and electronic assets.”
“[…] The OCC concludes…that providing cryptocurrency custody services, including holding the unique cryptographic keys associated with cryptocurrency, is a modern form of these traditional bank activities.”
The letter additionally notes that banks might doubtlessly present providers that quantity to “more secure storage services compared to existing options,” and that buyers and funding advisors might have a desired to entrust regulated custodians with their property, reasonably than an unregulated entity.
The letter was authored by Brian Brooks, a former Coinbase govt who’s the present head of the OCC. CoinDesk reported that since Brooks joined the regulatory earlier this summer season, he “has already proposed a number of reforms that would benefit crypto companies.”
These reforms embody a nationwide funds constitution that will let cryptocurrency startups that want to present fee providers bypass the present patchwork of state-by-state processes for buying cash transmission licenses.
Letter doesn’t signify coverage change, however reasonably clarification of current coverage
While the announcement doesn’t signify a coverage change–reasonably, a clarification of an current coverage– the information could possibly be fairly important for the cryptocurrency trade.
Previously, an absence of authorized readability round whether or not or not banks within the United States had the suitable to carry cryptocurrencies for his or her prospects led banks to keep away from Bitcoin and different cryptocurrencies. Fortune reported that this resulted in a de facto ban on banks offering many crypto-related providers to their prospects.
Now, nonetheless, large banks have primarily been given the ‘go-ahead’ to start providing cryptocurrency custody and different crypto-related providers to their customers. The query is: will they?
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“I’m looking forward to getting my ass kissed by all the banks now.”
For Barry Silbert, the founder and chief govt of crypto trade funding agency Digital Currency Group, the reply is probably going ‘yes.’
“I’m looking forward to getting my ass kissed by all the banks now,” he wrote on Twitter following the letter’s publication.
I’m wanting ahead to getting my ass kissed by all of the banks now
— Barry Silbert (@barrysilbert) July 22, 2020
“Oh what a change from when we first met??!!,” wrote Caitlin Long, founder and chief govt of crypto-friendly financial institution Avanti Bank and Trust, in reply. “That was 2014, I think…my how the tables have turned.”
After all, the cryptocurrency trade’s market cap at present sits at roughly $285 billion–a pleasant chunk of change that US banks might doubtlessly be all in favour of dipping their fingers into.
Some main banks within the United States have already began to supply cryptocurrency-related providers to their clientele: JPMorgan Chase, for instance, started offering help to Gemini and Coinbase earlier this yr.
Still, nonetheless, banks within the U.S. maintained a cautionary strategy towards serving the crypto trade; cryptocurrency exchanges and different startups appear to be usually considered dangerous for banks’ reputations, in addition to a authorized headache.
The distinction that banks can supply custody providers, nonetheless, could also be a step towards assuaging a number of the banks’ issues.
What are your ideas on whether or not extra banks will start to supply crypto custody providers? Tell us within the feedback beneath.