HomeLatest NewsOCC allows US banks to provide custody services for cryptocurrency

OCC allows US banks to provide custody services for cryptocurrency

July 24, 2020 By Nicholas Say

The Office of the Comptroller of the Currency recently announced that federally chartered banks can provide custody service for crypto assets

In an interpretive letter published earlier this week, the Office of the Comptroller of the Currency (OCC) clarified the ability of national banks and federal saving associations to provide services related to cryptocurrency custody to the public.

The OCC reaffirmed its position that any national bank is free to provide services to any lawful businesses they choose if risks are effectively managed and applicable laws are being respected.

The US has yet to create any sort of comprehensive legislation for crypto at a federal level, so there is a demand for clarification on how different government agencies view cryptos and what regulations may apply to handling them.

Crypto interest and safekeeping demand are growing

With approximately 40 million US Citizens owning cryptocurrencies and institutional investors investing in them, most states in the US have adopted laws and regulations when it comes to cryptocurrencies.

The increased demand for places or services to hold cryptographic keys associated with crypto wallets in a safe manner as well as allowing investment advisers to manage the assets on behalf of the customer prompted the interpretive later from the OCC.

Due to the irreplaceable nature of cryptographic keys, as well as the recognized value of the digital assets they protect, crypto holders around the world could consider and benefit from banks and financial institutions providing this service.

While the letter itself does not establish new regulations when it comes to cryptocurrency, it clarifies the Bureau’s stance when it comes to cryptocurrency custody, which is sure to generate interest from established banking institutions.

Cryptocurrency custody benefits its users

The OCC established that in addition to dual controls, segregation of duties, accounting controls as well as custodian records and controls need to be used to ensure the security of client assets. Any client assets must also be separated from the custodian’s assets.

Acting Comptroller of the Currency Brian P. Brooks referred to the need for these custodial services as follows:

“From safe-deposit boxes to virtual vaults, we must ensure banks can meet the financial services needs of their customers today. 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.”

Giving confidence to both users and financial institutions when it comes to providing services related to cryptocurrencies is one more step that could boost interest in digital assets.

Tags:
OCC, US