Banks in US now allowed to offer crypto custody services. Senior Deputy Comptroller and Senior Counsel Jonathan Gould wrote in a public letter dated 22 July that any national bank will hold on to the specific cryptographic keys for a cryptocurrency wallet, paving the way for national banks to keep digital assets for their clients.
The letter marks a important advancement for the crypto industry. Previously, custody was the domain of specialist firms, such as Coinbase, that usually required a state license to offer the service to large investors, such as a trust charter. Now, large, controlled financial firms that are already providing similar security services for stock certificates and the like may join the fray.
The letter, which appears to be addressed to an unidentified bank or similar entity, notes that banks “may offer more secure storage services compared to existing options,” and that both consumers and investment advisors may wish to use regulated custodians to ensure they don’t lose their private keys, and therefore, access to their funds.
“Providing custody for cryptocurrencies would differ in several respects from other custody activities,” the letter said.
It pointed to the need for digital wallets, adding that because they exist on a blockchain, there is no physical possession for cryptos. Additionally, according to the letter, banks can provide both fiduciary and non-fiduciary custodian services.
“The OCC recognizes that, as the financial markets become increasingly technological, there will likely be increasing need for banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers,” the letter read.
It also specified that banks entering the space “should develop and implement those activities consistent with sound risk management practices and align them with the bank’s overall business plans and strategies.”