WASHINGTON–The Office of the Comptroller of the Currency (OCC) said all nationally chartered banks in the U.S. may now provide custody services for cryptocurrencies.
In a July 22 letter, OCC Senior Deputy Comptroller and Senior Counsel Jonathan Gould stated any national bank can hold onto the unique cryptographic keys for a cryptocurrency wallet, clearing the way for national banks to hold digital assets for their clients.
In its analysis, CoinDesk.com noted the letter marks a major development for the crypto industry. “Previously, custody was the province of specialist firms, such as Coinbase, which typically needed a state license, such as a trust charter, to offer the service to large investors,” CoinDesk.com reported. “Now, large, regulated financial companies that already provide similar safekeeping services for stock certificates and the like could enter the fray.”
According to the analysis, the letter appears to be addressed to an unidentified bank or similar entity and states banks “may offer more secure storage services compared to existing options,” and that both consumers and investment advisors may wish to use regulated custodians to ensure they don’t lose their private keys, and therefore, access to their funds.
The Differences
“Providing custody for cryptocurrencies would differ in several respects from other custody activities,” the letter reads, further pointing to the need for digital wallets, adding that because they exist on a blockchain, there is no physical possession for cryptos.
“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,” the letter said.
Banks can provide both fiduciary and non-fiduciary custodian services, the OCC said, adding any bank offering the service “should develop and implement those activities consistent with sound risk management practices and align them with the bank’s overall business plans and strategies.”
OCC Chief Drives Discussion
CoinDesk.com noted the OCC is currently headed up by Brian Brooks, a former Coinbase exec who joined the regulator earlier this year.
“He’s filled in as Acting Comptroller since the beginning of the summer, and has already proposed a number of reforms that would benefit crypto companies, including a national payments charter which would let crypto startups bypass the state-by-state approach in terms of acquiring money transmission licenses if they provide payment services,” CoinDesk.com stated.