U.S. Banks Now Permitted To Provide Cryptocurrency Services
Over the last few years, crypto assets have continued to grow in popularity amongst investors. One of the biggest obstacles faced by digital assets, however, is the difficulty that both large and small cryptocurrency businesses have had in securing banking services. This problem does, however, create an opportunity for banks, who until now have generally avoided offering banking services to blockchain projects out of regulation-related fears. Although there is still a lack of an approved framework for banks to work in, a number of smaller banks have begun venturing into the cryptocurrency industry, a practice that has become simpler after a recent ruling earlier this year by the Office of the Comptroller of the Currency (OCC), which officially allowed banks to begin storing and working with cryptocurrency.
Banks and Cryptocurrency Services
The Office of the Comptroller of the Currency (OCC) is a federal agency that regulates all U.S. banks. Recently, this agency issued a guidance letter to clarify the role of traditional banks in the virtual assets market. Specifically, national banks and federal savings associations across the country have been given permission to provide cryptocurrency custody services to their customers, which includes the ability to hold digital assets, as well as unique encoded keys associated with digital currencies, on behalf of their clients.
Prior to the issuance of this letter, only crypto-focused companies were permitted to provide these kinds of services to customers. It’s important to keep in mind, however, that banks that choose to provide services to cryptocurrency businesses will be required to take certain steps towards managing risks and will also need to comply with a wide range of important federal and state regulations
How the OCC’s Ruling Could Affect the Cryptocurrency Industry
The additional sense of security that providing cryptocurrency banking services will provide, could play a significant role in incentivizing customers to pay more for those services. This in turn, will likely accelerate adoption of blockchain technology and the use of crypto assets nationwide. In fact, earlier this summer, Wyoming granted a state banking charter to a crypto exchange company, known as Kraken, making it the first crypto company to become a bank in the country.
Many experts predict that this trend will only continue, with more and more banks getting into crypto banking, which could prove to be a major driver of revenue. This potential for increased earnings is largely attributable to the fact that banks may be able to charge above-average fees on cryptocurrency-related business simply because they are dealing with a new class of assets.
Call an Attorney for Help
The recent changes initiated by the OCC will have a significant impact on the ability of crypto exchange companies to become banks. Furthermore, cryptocurrency companies that do choose to go this route will be required to comply with a host of new complex regulations, making it especially important for companies that deal in digital assets, to speak with an attorney about their questions and concerns before taking official action.