Nationally Chartered Banks in the U.S. Can Now Provide Custody Services to Cryptocurrencies
In what was deemed to be a huge win for the crypto industry, the U.S. Department of Treasury has ruled that national banks and savings associations can provide custody services to cryptocurrencies. The Office of the Comptroller of the Currency (OCC), a bureau within the U.S. Department of Treasury, published a letter clarifying the authority national banks have when it comes to providing cryptocurrency custody services to their customers.
According to the official statement from the OCC, allowing banks to deal directly with cryptocurrencies is an extension of their business practice of providing safekeeping and custody services.
“The OCC concludes that providing cryptocurrency custody services, including holding unique cryptographic keys associated with cryptocurrency, is a modern form of traditional bank activities related to custody services,” it said in the official statement.
The custody services U.S. banks can now provide to their clients extend far beyond just passively holding private keys to their clients’ cryptocurrency addresses. Brian P. Brooks, the Acting Comptroller of the Currency and former Coinbase executive, said that the OCC must ensure that banks in the U.S. can meet all of the financial services their customers need today, ranging from safe-deposit boxes to virtual vaults:
“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.”
Senior Deputy Comptroller and Senior Counsel Jonathan Gould was the one who cleared the way for any bank in the U.S. to hold the private keys for a cryptocurrency wallet or address. In his letter, which several sources reported was addressed at an unidentified bank, he noted that providing banks with the ability to offer more secure storage services will lead to more consumers and investors storing their cryptocurrency funds “in a more secure storage service.” The letter clarified that banks will now be able to provide both fiduciary and non-fiduciary services to their U.S.-based customers.
So far, the only condition put upon the banks was that they’d have to “effectively manage the risks and comply with applicable law” when providing cryptocurrency custody services to their customers.
Even without any further context or regulatory guidance, the OCC’s move was seen as a huge win for the crypto industry. The speculations on whether more banks will take on custodial roles for their clients’ digital assets arose earlier this year when JP Morgan Chase began providing services to cryptocurrency exchanges Gemini and Coinbase.
While the decision to loosen the regulatory grip around banks and cryptocurrencies certainly wasn’t an ad-hoc one, it’s safe to say that the current Acting Comptroller might have been a strong driving force behind the decision. Brooks was previously the Chief Legal Officer of Coinbase, where he was responsible for the company’s legal and government relations. He left his position at Coinbase in April this year, having joined the Comptroller of the Currency as Senior Deputy Comptroller and CEO.