US bank regulator to allow banks provide crypto custodial services

Tuesday 28 July 2020 12:38 CET | News

The Office of the Comptroller of the Currency (OCC) has released opinion on US banks safeguarding customers virtual/crypto assets.

The OCC serves to charter, regulate, and supervise national banks. 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’.

In the letter initiated by the authority it is clarified that national banks have the authority to provide fiat bank accounts and cryptocurrency custodial services to cryptocurrency businesses. According to Forbes, this clarification from the OCC may open the doors for larger financial institutions to be more comfortable providing traditional bank accounts to cryptocurrency companies, as well as provide custodial services for customers’ private keys.

In its letter, the OCC acknowledged the difference between custodial services for fiat money versus cryptocurrency. Furthermore, the authority noted that because digital currencies exist only on the blockchain or distributed ledger, there is no physical possession of the instrument. As a result, a bank storing digital currencies on behalf of a customer will take possession of the cryptographic access keys to that unit of cryptocurrency.

The letter also reaffirms the OCC’s position that national banks may provide permissible banking services to any lawful business, including cryptocurrency businesses, ‘so long as they effectively manage the risks and comply with applicable law’.

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Keywords: crypto custodial services, cryptocurrency, banking, Office of the Comptroller of the Currency, US, cryptographic access keys
Categories: DeFi & Crypto & Web3
Countries: United States
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DeFi & Crypto & Web3

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