The United States Office of the Comptroller of the Currency (OCC) has announced that federal savings associations and national savings banks can now hold cryptocurrencies on behalf of their customers.
According to an official notice published on Wednesday, the OCC stated:
“Providing custody services for cryptocurrency falls within these longstanding authorities to engage in safekeeping and custody activities. As discussed below, this is a permissible form of a traditional banking activity that national banks are authorized to perform via electronic means. Providing such services is permissible in both non-fiduciary and fiduciary capacities. A bank that provides custody for cryptocurrency in a non-fiduciary capacity would essentially provide safekeeping for the cryptographic key that allows for control and transfer of the customer’s cryptocurrency.”
The new OCC directive comes just over a month after the commission sought public opinion on the digital activities of financial institutions especially those involving the relationship between the U.S banking sector, blockchain, and the cryptocurrency industry.
By the announcement, the institution issues a clear stance on the long debated subject of cryptocurrency custody; as it adds that both national banks and federal savings associations of all sizes can offer the service.
A further look at the OCC publication describes cryptocurrency, and exactly what type of crypto custody service the banks will offer. It explains:
“Because digital currencies exist only on the blockchain or distributed ledger on which they are stored, there is no physical possession of the instrument. Instead, the right to a particular unit of digital currency is transferred from party to party by the use of unique cryptographic keys. Therefore, a bank ‘holding’ digital currencies on behalf of a customer is actually taking possession of the cryptographic access keys to that unit of cryptocurrency.”
The regulator goes on to instruct that banks looking to provide cryptocurrency custody services must ensure sound risk management practices, with the full understanding of handling and dealing with cryptocurrencies in compliance with laws and overall business strategies.
Speaking on development, Brian Brooks Acting Comptroller of the OCC and a known Bitcoin enthusiast is quoted:
“From safe-deposit boxes to virtual vaults, we must ensure banks can meet the financial services needs of their customers today,” Brooks remarked. “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.”
Across the cryptocurrency community, the news was welcomed as a symbol for adoption, as more global banks and financial institutions show interest in the blockchain and cryptocurrency industry.