In what is a landmark for the cryptocurrency industry, The Office of the Comptroller of the Currency (OCC) has confirmed in a letter dated July 22, that it allows all “national banks and federal savings associations’ authority to provide cryptocurrency custody services for customers.”
The OCC clarification letter, purportedly addressed to an unknown financial entity, cites existing powers granted to National and state banks and thrifts to provide custodial services to their customers as a backing that they can as well offer crypto custody services.
The OCC mentioned that it had since 1998 recognized the importance of digital assets and the authority for banks to provide safekeeping for such assets.
Given that the landscape for these digital assets has changed over the years, and now includes cryptocurrencies, the OCC concluded in its letter 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.
In some cases, the OCC specified that crypto custody services might extend beyond passively holding “keys.” For instance, the letter allows these banks to “offer more secure storage services compared to existing options,” and made provision for both consumers and investment advisors to employ the service of regulated custodians to protect their private keys.
Interestingly, the regulator acknowledged that doing so will allow banks to “continue satisfying their customers’ needs for safeguarding their most valuable assets, which today for tens of millions of Americans includes cryptocurrency.”
“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.” OCC
Additionally, these “banks can continue to fulfill the financial intermediation function they have historically played in providing payment, lending, and deposit services,” the OCC wrote in the accompanying press release.
Meanwhile, it is to be recalled that JP Morgan is already offering banking services to heavily-regulated crypto exchanges, Coinbase, and Gemini. The OCC, however, has now confirmed that the services can go beyond handling only fiat transactions for crypto-related companies.