- About 12 banking institutions in the United States are asking for greater clarity for the custody of Bitcoin and other cryptocurrencies.
- The banking institutions responded to a public call from the Office of the Comptroller of the Currency (OCC).
As reported by CNF, the US Office of the Comptroller of the Currency made a groundbreaking decision last month in favor of Bitcoin and cryptocurrencies. Perhaps one of the biggest decisions on this asset class made by a U.S. federal regulator, the OCC granted permission for the custody of Bitcoin and other cryptocurrencies to banking institutions licensed in the United States.
Banks in the United States have responded positively, but are demanding greater clarity on the OCC’s decision. The regulator opened a public consultation (Advanced Notice of Proposed Rule making) that ended on August 3. There, about 12 banking institutions brought their concerns and interest in offering custody and other crypto services to the OCC. In total, the office received more than 90 responses from private entities and companies with or without ties to the crypto industry.
Grayscale, Coinbase, TransferWise, Ripple Labs and ConsenSys are just a few of the names that have raised their voices. Also, one of the respondents was none other than the tech-giant Google who urged the regulator to take a more active role in the industry. Google believes that hackathons, in-house prototype programs, competitions and other activities are needed to drive development.
For its part, ConsenSys highlighted the uncertainty and associated risk that traditional financial institutions perceive when attempting to approach cryptocurrencies:
The inability of many blockchain and digital assets companies to obtain bank accounts hinders FinTech innovation in the United States, resulting in a barrier to further adoption of crypto-related activities in the banking industry.
Coinbase Vice President Juan Saurez also highlighted the uncertainty surrounding crypto activities:
Although these services, such as borrowing, lending and remittances, are permissible activities for national banks, there remains some uncertainty as to whether the provision of these services using cryptocurrencies is authorized.
US banks uncertain about Bitcoin custody
On the banking side, the response of the American Bankers Association (ABA) again highlights the lack of comfort of these institutions towards the crypto industry. Without a clear regulatory framework and robust laws that can provide safeguards, the ABA expressed:
Effective policy analysis on crypto assets is essential to maintaining banks’ capacity to innovate, but it may be inhibited by the lack of common terminology. A common taxonomy and understanding of crypto assets’ risks and features, broadly consistent and coordinated across all the relevant regulators, is essential to fostering prudent innovation within a sound risk management framework.
The ABA added that regulators have to reach a common understanding to prevent regulatory inconsistencies that could lead to sanctions. So while the OCC’s decision is positive, the ABA is making clear that additional steps will need to be taken to encourage the adoption of Bitcoin and other cryptocurrencies.
Dispelling regulatory uncertainty among different regulators seems to be the first step. According to Avanti Bank and Trust CEO Caitlin Long, of the 50 US states only one has offered clarity, as Long stated via Twitter:
(…) check out what the American Bankers Association said abt crypto in its USOCC comment letter today. Not opposing anymore–now seeking legal/regulatory clarity so banks can participate. Wyoming is the ONLY US state that has already clarified–49 more to go.