Banks in the US Can Now Offer Crypto Custody Services

Banks in the US Can Now Offer Crypto Custody Services

28/08/2020 by Admin
The US Treasury has authorized chartered banks to provide cryptocurrency custody services for customers. On July 22, 2020, the Office of the Comptroller of Currency through Senior Deputy Comptroller and Senior Counsel Jonathan Gould issued an advisory letter. The writing stated that any national bank could act as a custodian for cryptographic keys. These vital codes allow access to cryptocurrency wallets.
Crypto Custody Services appreciates the roles of banking institutions in cryptocurrency. Koinal provides a service that links banks to the cryptocurrency markets. Koinal’s purchasing process helps buyers purchase cryptocurrency using bank debit cards and bank credit cards. The advisory letter clarifies regulation, and the national banks can hold digital assets for clients. The rule affects all US federally chartered banks, and this list includes some of the nation’s largest banking institutions.

The OCC Controls Bank Activity

The Office of the Comptroller of Currency is an essential part of US bank regulation. The Comptroller is the administrator of the federal banking system and chief executive officer of the Office of the Comptroller of the Currency (OCC). The office supervises nearly 1,200 banking institutions that conduct approximately seventy percent(70 percent) of the US banking business.

Keeping the Keys Safe

The OCC ruling confirms the importance of safekeeping the encryption keys that allow access to cryptocurrency accounts. Private keys are essential for controlling digital assets. Crypto custody services will help banks assist institutional and individual investors. Institutional and individual investors increasingly use cryptocurrency. Many investors use cryptocurrency to diversify their positions as a hedge against market volatility.

Banks are New Players 

Before the ruling allowed banks to keep cryptographic keys, owners had to use various companies to obtain security for their crypto assets. These included companies like Coinbase that provided custodial service for crypto keys. The letter recognizes that cryptocurrency custody services differ from usual bank services because the crypto assets are digital and do not involve physical safekeeping. The letter recognizes that there is a likely future direction involving new technology and innovative forms for assets.

According to the announcement letter, the rule has two goals. It allows banks to provide essential crypto custody services to a growing group of customers that use cryptocurrencies.

The OCC wishes to encourage innovative thinking for bank services to engage more digital assets in financial technology. This policy shift is vital to the future role of chartered banking institutions.

OCC Oversight Is Important

Overall, the OCC’s goal is to ensure that national banks and federal savings associations operate ethically and provide fair access to financial services. Regulated institutions must comply with banking laws and regulations. The OCC has oversight responsibilities for federally chartered banking institutions. They include some of the largest banks and thrift institutions.

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