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OCC opens the doors for banks to custody crypto on behalf of customers

OCC

The Office of the Comptroller of the Currency is an independent bureau within the U.S. Department of the Treasury. It ensures that all national banks and federal savings associations operate in a safe and sound regulatory framework.

Banks Allowed to Custody Crypto

In an interpretive letter released this month, the OCC stated that national banks are allowed to custody cryptocurrencies on the behalf of customers, which would include holding the private keys of those cryptographic assets. Additionally, the OCC re-affirmed their pro-position on national banks offering banking services to cryptocurrency businesses. Of course, the latter is contingent on banks complying with the applicable laws and managing risk appropriately.

Banks & Crypto: Antonyms?

For early adopters and most of the current crypto-sphere, cryptocurrencies are a step forward from traditional banks. Mostly in the sense of self-custody where the saying “not your keys, not your Bitcoins” applies. Therefore banks holding cryptocurrencies on behalf of customers may sound counter-intuitive to many.

The issue being that the current technological barrier is not an easy one to cross for the average person. Learning how to transfer funds with diligence, handling private keys, trading the asset and then sending it from one to another (cold storage for example) is a daunting experience. Any small mistake can cost bigly.

A traditional bank handling this mechanism and perhaps offering insurance for stolen/lost funds would ease the mind of many and give them the route they needed to dip their toes in this novel asset class.

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