The relationship between banks and cryptocurrency in the United States has been as complicated as the concept of “money” itself. But today’s interpretive letter from the Office of the Comptroller of the Currency (OCC) may be changing all of that.
The OCC serves to charter, regulate and supervise national banks. Today’s OCC letter clarifies that national banks have the authority to provide fiat bank accounts and cryptocurrency custodial services to cryptocurrency businesses. This clarification from the OCC may open the doors for larger financial institutions to be more comfortable providing traditional bank accounts to cryptocurrency companies, as well as actually provide custodial services for customers’ private keys.
In its letter, the OCC acknowledged the difference between custodial services for fiat money versus cryptocurrency, noting that because digital currencies exist only on the blockchain or distributed ledger, there is no physical possession of the instrument. Therefore, a bank “holding” digital currencies on behalf of a customer will take possession of the cryptographic access keys to that unit of cryptocurrency.
“From safe-deposit boxes to virtual vaults, we must ensure banks can meet the financial services needs of their customers today,” said Acting Comptroller of the Currency Brian P. Brooks. “This opinion clarifies that banks can continue satisfying their customers’ needs for safeguarding their most valuable assets, which today for tens of millions of Americans includes cryptocurrency.”
And while there are differences between fiat and cryptocurrency, the need to protect one’s financial wealth is the same. Currently those holding cryptocurrency can keep their cryptocurrency in a digital wallet, with an exchange or for higher net worth individuals, a Trust Company. The OCC’s statements are incredibly helpful in providing assurances to banks that they can pursue this line of cryptocurrency custodial service.
Industry players including Gemini, a regulated cryptocurrency exchange and Anchorage, a digital asset custodian, agree this can be good for the industry.
“Today’s forward thinking announcement by the OCC validates Gemini’s long standing approach to custody. Gemini has built an institutional-grade custody solution to address the unique challenges of storing digital assets, that’s regulated by the NYDFS, and serves many institutional partners. A regulated solution provides the best option for the safety and security of clients’ crypto assets,” said Noah Perlman, Chief Compliance Officer, Gemini.
Nathan McCauley, CEO of Anchorage, which provides digital asset custodian services for institutions said, “The OCC letter is a positive development for the entire crypto industry. A lack of regulatory clarity has been a big roadblock to more institutional activity in crypto, and major pronouncements like this help move the needle.”
However, McCauley cautioned,…