The Office of Comptroller of the Currency (OCC) allowed traditional banks to provide cryptocurrency custody services for its customers.
The OCC, an independent financial institution watchdog within the United States Department of the Treasury, made a historic announcement this week, allowing national banks the right to serve as both physical and digital asset custodians.
The significant decision is expected to encourage traditional financial institutions to provide traditional bank accounts for its cryptocurrency business clients as well as offer crypto custodian services for customers with private keys. The document stated:
We conclude, the national bank may provide these cryptocurrency custody services on behalf of customers, including by holding the unique cryptographic keys associated with cryptocurrency.
The OCC additionally confirmed the right for national banks to provide services for any lawful businesses including cryptocurrency companies for as long as they manage the risks and comply with the law.
According to the document, the financial markets become increasingly technological, and traditional financial institutions face the increasing need to leverage new technology and find innovative ways to provide proper service for their customers. The regulator further highlighted that providing crypto custody services is “ a modern form of traditional bank activities”.
The decision comes a month after the majority of states have finally adopted laws and regulations related to digital currencies. In the meantime, over 40 million citizens already admitted they are owning virtual assets, and 14 institutional investors have put their capitals into cryptos.
Institutional interest growing
The evolution of digital assets and the blockchain technology brought more maturity to cryptocurrencies like Bitcoin and to the whole crypto market itself. Back in 2017 the crypto industry was highly speculative and could have been compared with the Wild West. But the corporate interest in digital assets is constantly growing, and virtual currencies become acknowledged by traditional institutional investors.
Contracts on Bitcoin futures are already established and options on Bitcoin futures are now trading. The Securities and Exchange Commission (SEC) recently approved a Bitcoin futures fund. Traditional financial institutions across the globe are asking for a licence to provide cryptocurrency services.
With this in mind, the crypto custody service seems to become the normal practice for the financial businesses dealing with institutional clients. Especially when the majority of custodian clients are institutional investors with a need to safely store their digital holdings.