The Office of the Comptroller of the Currency (OCC) is letting nationally chartered banks in the U.S. provide custody services for cryptocurrencies, according to a public letter from Senior Deputy Comptroller and Senior Counsel Jonathan Gould.
The letter, first reported on by CoinDesk and dated July 22, details that any national bank can hold onto the unique keys needed for a cryptocurrency wallet, meaning national banks can now hold digital assets on behalf of their clients.
The letter, the news outlet notes, is a major development for the crypto industry as previously custody was provided by native crypto firms like Coinbase, which typically needed a state license to hold funds on behalf of large clients. Now, large regulated financial firms can provide crypto custody services, improving the market’s accessibility.
It also adds banks may offer “more secure storage services compared to existing options,” adding that both consumers and investment advisors may want to use regulated custodians to ensure they don’t lose access to their funds. The letter pointed out, however, custody services would differ from other similar activities.
Providing custody for cryptocurrencies would differ in several respects from other custody activities.
The letter further added the OCC recognized that financial markets are becoming increasingly technological, which means there is an increasing need for “banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers.”
Banks entering the cryptocurrency space, it adds, should now develop and implement their custody services with “sound risk management practices,” align them with their overall business plans and strategies.
The document further reaffirms that national banks may “provide permissible banking services to any lawful business they choose, including cryptocurrency businesses.” This, as long as these firms manage the risks and comply with applicable regulations.
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