- A new legal clarification in the USA allows all licensed banks in the USA to offer custody services for cryptocurrencies.
- This step could involve a major wave of adoption, as custody has so far been reserved for specialist companies with a special license such as Coinbase or Gemini.
The secure custody of cryptocurrencies is enormously important for the progress of adoption and the confidence of the population in digital currencies such as Bitcoin, Ethereum or XRP. In the United States of America, it was previously reserved for companies such as Coinbase or Gemini to store cryptocurrencies for their customers. Until now, a government license was required to offer this service.
US banks may hold cryptocurrencies for their customers
The Office of the Comptroller of the Currency (OCC) has now published a new letter that clarifies that all licensed banks in the US are allowed to offer custodial services for cryptocurrencies. The letter, dated July 22, 2020, was written by Jonathan Gould, Senior Deputy Comptroller and Senior Counsel, and states in detail that any bank in the country may store and manage the cryptographic keys for wallets for its customers.
This adds an important service to the range of services offered by banks, which could have far-reaching implications for the crypto industry. The letter states that the safekeeping of cryptocurrencies differs in several respects from traditional custody services, as cryptocurrencies do not exist materially, but only on the blockchain:
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.
Banks should be allowed to offer both fiduciary and non-trustee custody services. The letter also specifies that banks must implement appropriate security measures to ensure the safe custody of customers’ assets:
[The letter reaffirms] 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.
Brian Brooks took over as Chairman of the Board of Directors at the beginning of the year. Brooks was previously Chief Legal Officer at the cryptocurrency exchange Coinbase, where he headed the Legal, Compliance, Internal Audit and Government Relations departments and has already proposed a number of reforms that will benefit crypto companies in the country.
Nathan McCauley, CEO of Anchorage, one of the largest providers of custody solutions for cryptocurrencies, sees this as a positive development from which the entire industry will benefit:
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.
Unclear legal regulation can throw the US behind
Mike Novogratz, a multiple billionaire and Bitcoin cop, has been warning for several months that the USA could lose its leading role in the blockchain and fintech sector worldwide. The country’s regulatory authorities must create better location and legal framework conditions that support a climate of innovation and vision in this area and do not hinder progress.