US Banking Regulator Greenlights Crypto Custody at Federally Chartered Banks

Published at: July 22, 2020

Per a July 22 announcement shared with Cointelegraph, the Office of the Comptroller of the Currency, or OCC, is granting permission to federally chartered banks to provide custody services for cryptocurrency.

The future of banking with crypto on board

This issue has seen much skepticism, given that crypto wallets do not resemble the custody requirements of other sorts of assets. Nonetheless, in its interpretive letter on the subject, the OCC wrote: 

“The OCC recognizes that, as the financial markets become increasingly technological, there will likely be increasing need for banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers.”

In the words of the announcement, the new opinion “applies to national banks and federal savings associations of all sizes.”

Acting Comptroller of the Currency Brian Brooks similarly saw the development as part of modernizing banking in the U.S., saying “From safe-deposit boxes to virtual vaults, we must ensure banks can meet the financial services needs of their customers today,”

The OCC’s letter further specifies that bank “custody” of crypto assets is dependent on their access to the keys to the crypto wallets rather than any sort of physical requirement — a confirmation of Andreas Antonopoulos’ famous line of “not your keys, not your coins.” the OCC specifies:

“That national banks may escrow encryption keys used in connection with digital certificates because a key escrow service is a functional equivalent to physical safekeeping.”

OCC’s heightened crypto engagement under Brooks

Coming from Coinbase’s legal team, Brian Brook’s tenure as Acting Comptroller has seen accelerated onboarding of crypto capabilities in the U.S. financial system. 

Speaking with Cointelegraph in early June, Brooks hinted at his interest in expanding the right to custody crypto.

This follows an international trend of banks looking to incorporate the crypto asset class.

Tags
Regulation
Government
Law
Coinbase
Banks
Related Posts
OCC's Brian Brooks thinks that DeFi can root out bias and fraud in traditional banking
In an opinion piece published in the Financial Times on Tuesday, Acting Comptroller of the Currency Brian Brooks put forward the need to reconfigure banking regulations for an age of algorithms. Brooks, who currently leads the Treasury's Office of the Comptroller of the Currency, compared existing banking regulations to traffic laws. He further used the analogy of self-driving cars for new steps in decentralized finance. "Just as the original rules of the road protected us from other drivers, so our current bank regulations exist mainly to prevent human failings," wrote Brooks. The overall tone of Brook's letter is confident that …
Regulation / Jan. 12, 2021
US banking regulator authorizes federal banks to hold reserves for stablecoins
Per an interpretive letter from the U.S. Office of the Comptroller of the Currency released on Monday, national banks will be free to hold reserve currencies for stablecoins. The new guidance reads, "We conclude that a national bank may hold such stablecoin 'reserves' as a service to bank customers." Alongside the announcement, Acting Comptroller of the Currency Brian Brooks noted that stablecoin services are already a part of many banks' activities: “National banks and federal savings associations currently engage in stablecoin related activities involving billions of dollars each day.” The letter does, however, specify that for now, this will only …
Regulation / Sept. 21, 2020
OCC works to win back House Democrats, still miffed at leader's focus on crypto
The U.S. Treasury's Office of the Comptroller of the Currency is expanding an outreach program designed to provide access to minority depository institutions, or MDIs. Per a Thursday announcement shared with Cointelegraph, the OCC's Project REACh is expanding to include a pledge of large and mid-sized banks partnering with MDIs. The pledge requires the partner bank to expand investment and support for executive development at the MDI that it works with. MDIs are simply banks or credit unions that are majority-owned by ethnic or racial minorities. They are seen as critical to expanding financial inclusion to minority groups left out …
Regulation / Dec. 3, 2020
US regulator wants to stop banks from blacklisting legal businesses, crypto included
Per an announcement on Friday, the Office of the Comptroller of the Currency, or OCC, is looking for public comments on rule-making that would stop banks from denying services to businesses based on sector. In the words of Comptroller Brian Brooks, “Blanket boycotts of entire industry sectors have to stop.” The OCC’s announcement points to political hot-button issues that banks have systematically denied services to, including oil and gas companies in Alaska as well as Planned Parenthood. Speaking to the media, Brooks noted the bipartisan nature of many of these bans: “These things are not politically partisan, but there are …
Regulation / Nov. 20, 2020
UPDATED: State-by-state licensing for crypto and payments firms in the US just got much easier
An organization of state regulators in the U.S. has announced a new streamlined process for money transmitter licensing that will save large operators — including firms — from getting separate licenses in every state. The Sept. 15 announcement from the Conference of State Bank Supervisors (CSBS) has set out parameters for state licensing that will involve a single exam administered by examiners from across the country. Nationwide payments firms, meaning those operating as money transmitters in 40 or more states, will be able to get a single license to operate throughout the U.S. There are currently 78 such firms in …
Regulation / Sept. 15, 2020