National banks and federal saving associations can now offer crypto custody services to customers following approval from regulators in the country.
OCC Okays Crypto Custody Operations for US Federal Banks
According to a letter issued by the Office of the Comptroller of the Currency (OCC) on Wednesday, U.S. Federal banks can now offer crypto custody services. The decision follows last month’s request by the OCC for public input on the matter.
As part of the letter, the OCC explained the rationale for its decision noting that crypto owners desire safe custody of their tokens from recognized institutions like banks. The OCC also argued that banks offering crypto storage could be beneficial for market participants like investment advisers who require third-party asset custodianship by law.
For the OCC, the decision to allow banks custody crypto follows naturally from their longstanding involvement in safeguarding physical assets. The move is also indicative of the new direction of the OCC concerning cryptos under the leadership of Brian Brooks, formerly of Coinbase.
Commenting on the importance of the OCC’s decision, Brooks, the Acting Comptroller of the Currency remarked:
“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.”
As part of the approval given to banks, the OCC maintained that they must segregate customer’s assets from their own crypto holdings. The banking regulator also enjoined banks looking to provide such services to adhere to the highest safety standards.
The OCC also revealed that its approval does limit banks to a particular type of crypto custody. Thus, financial institutions can store copies of their customer’s private keys or hold the virtual assets themselves in secure cold storage facilities.
Expanding Cryptocurrency Custody Scene
Before today’s announcement from the OCC, some state banks were already providing crypto custody services. With national banks in the mix, the options for safe storage of cryptocurrencies is about to increase.
In recent times, corporations like Fidelity Investments have also rolled out crypto custody plans. Trading giants like Coinbase and Bakkt also have their own crypto custodial platforms.
Robust storage for cryptocurrencies has always been identified as a major requirement for more institutional adoption. Some companies are even developing technology that will allow efficient trading and staking right from cold wallets.