Big banks have long held precious items on behalf of their customers, from jewelry in safes to stock. Now, thanks to a new policy from a federal banking regulator, they will also be able to hold cryptocurrencies like Bitcoin.
The new policy is set out in a letter published Wednesday by the Office of the Comptroller of the Currency (OCC). The letter, addressed to an unidentified bank, said that national banks and savings associations can contract so-called custodial services for their clients.
The news is significant because regulatory uncertainty has so far led major banks to avoid Bitcoin. Additionally, the statutes of many large mutual funds, including pension funds, require them to deposit clients’ money only in banks authorized by the federal government. As the research group Coin Center points out, this amounts to a de facto ban on cryptocurrencies.
The result is that big banks now have the green light to open crypto trades. If they do, they will likely start by focusing on escrow services, which until now have been the competition of crypto-focused companies like Coinbase and BitGo.
Custody is important in the world of cryptocurrencies, as currencies like Bitcoin are completely digital, making them easy to steal. Being a custodian implies storing the so-called private key that gives access to a certain digital wallet.
As an OCC note in their letter, banks already offer to protect other digital items on behalf of their customers.
Cryptocurrency custody is also likely to be an attractive line of business, given that bitcoin has a market capitalization of about $ 170 billion, and custodians typically charge around 0.25% to maintain it. Safe.
The OCC letter also opens the door for banks to offer more exotic services, such as gambling, a form of proxy voting for certain cryptocurrencies, and cryptocurrency loans. Such activity is small in the context of the financial system in general, but it has become increasingly important in the crypto industry.
