Syed Rahman of financial crime specialists Rahman Ravelli considers the implications for those that take up the opportunity.
All nationally-chartered banks in the US are now able to provide custody services for cryptocurrencies.
The Office of the Comptroller of the Currency (OCC) has given the go-ahead, meaning that any national bank can hold the cryptographic keys for a cryptocurrency wallet and hold digital assets for their clients. A service that was previously conducted by specialist firms that usually required a specific licence is now open to the larger, regulated financial institutions.
The OCC has stated that, as financial markets become more technological, there is likely to be a growing need for banks and other service providers to use new technology and employ innovative ways to offer traditional services to their customers. It has emphasised that banks looking to develop their cryptocurrency custody services need to develop them "consistent with sound risk management practices and align them with the bank's overall business plans and strategies."
The OCC is currently headed by Brian Brooks, who used to be a senior figure at the digital currency exchange, Coinbase. He has proposed a number of reforms that would, if introduced, benefit crypto companies. These include a national payments charter to enable start-up crypto businesses to bypass the state-by-state approach to applying for money transmission licences in order to offer payment services. Read more about Cryptocurrency.
The OCC's policy for the banks has to be viewed as a clear-cut example of how the markets are rapidly changing and adopting new technological methods to meet the needs of customers. But while this is, without doubt, a very significant step for the crypto industry, it needs to be emphasised that caution must be applied from a regulatory and compliance perspective. The OCC move gives banks an opportunity - but they have to ensure that in taking it they meet all the obligations that come with it.
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