Quick take:
- The OCC has formally given the green light for US banks to offer crypto custody solutions for their customers.
- Bitcoin (BTC) and Ethereum (ETH) have rallied as a result.
- US Banks being allowed to offer crypto custody is bullish for they will provide faster fiat onramps.
Bitcoin and Ethereum have reacted positively to news of the OCC giving the green light to US banks to offer crypto custody solutions to their customers. The Office of the Comptroller of the Currency (OCC) made the announcement yesterday and stated the following.
The OCC has specifically recognized the importance of digital assets and the authority for banks to provide safekeeping for such assets since 1998.
In the letter published today, the OCC concludes 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. Crypto custody services may extend beyond passively holding “keys.”
Banks Need to Evolve to Meet the Needs of Their Customers
The announcement by the OCC further elaborated that banks need to offer adequate security for customers holding digital assets. Brian P. Brooks, Acting Comptroller of the Currency, explained that banks need to evolve to meet the needs of their customers.
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.
The announcement by the OCC further elaborated that financial markets are increasingly going digital and financial service providers need to leverage new technology to keep up with the times.
The OCC also recognizes that, as the financial markets are increasingly digitized, the need will increase for banks and other service providers to leverage new technology and innovative ways to serve their customers’ needs. By doing so, banks can continue to fulfill the financial intermediation function they have historically played in providing payment, lending, and deposit services.
US Banks Providing Crypto Custody Solutions is Bullish
When news hit of the Office of the Comptroller of the Currency (OCC) allowing US banks to provide safekeeping and crypto custody services, BTC and ETH broke the important resistance levels of $9,500 and $250 respectively. At the time of writing this, Bitcoin is trading at $9,507 and Ethereum at $262 with ETH exhibiting more gains between the two due to the news.
The reaction by both Bitcoin and Ethereum to the announcement by the OCC proves that this move is bullish for the entire crypto industry. Furthermore, such services by US banks will provide faster fiat onramps for US crypto traders as explained in the following Tweet by Su Zhu from Deribit Insights.
US banks being able to offer custody is insanely bullish bc it means the guys like signature/silvergate could onboard fiat deposits -> convert to stablecoin ->get yield in DeFi
Incumbents will see this growth and then join
It gives a biz model for crypto custodians finally
— Su Zhu (@zhusu) July 22, 2020