The Federal Government and associated banks have never been a fan of cryptocurrencies. However, a letter from the Office of the Comptroller of the Currency (OCC) is about to change this bitter relationship forever.
In the letter published on 22 July, OCC clarifies that the US Banks (national) have the authority to provide custodial services to cryptocurrency holders. Consequently, this will open opportunities for cryptocurrency companies to avail custodial services from nationalized financial institutions. This will also help customers with safe custody services for their private keys
According to the letter, OCC recognizes the financial markets are becoming increasingly digitized. Thus this is the appropriate time for US banks and financial institutions to adopt the latest technology to meet customer needs.
What does this service mean?
In a statement to the press, Brian P. Brooks, Acting Comptroller of the Currency said that banks need to alter their services according to customer needs. Furthermore, he adds that whether it is a safe-deposit or a virtual vault, banks must satisfy the customer requirements.
According to Brian, cryptocurrencies have become one of the most valuable asset across the United States. Close to tens of millions of Americans hold crypto assets today and banks must play a role to safe-guard the customer assets in any form.
As digital currencies do not exist in physical form, thus banks will help customers protect their assets by offering custody services of their private keys.
The letter also clarifies that the US Banks may provide banking services to cryptocurrency businesses. But while providing these services, banks must manage risk and stay on the right side of the law.
This letter comes as wonderful news for cryptocurrency businesses and exchanges. Most of the exchanges are struggling to provide fiat deposit and withdrawal support to their customers. With this clarification, banks and cryptocurrency industry might start working hand in hand to serve a common group of customers.
Not everyone is happy about the big news
As soon as the letter was out, bitcoin started pumping and crossed $9,500. Since the drop on 24 June, Bitcoin had been struggling to climb over $9,400.
What could have been considered as major news to pump bitcoin-like crazy didn’t do much for the price this time. The excitement was dampened by some of the bitcoin proponents like Jameson Lopp, Co-founder & CTO Casa Hodl.
According to Jameson, the way crypto exchanges were hacked and customers’ crypto assets disappeared in thin air, the same would now happen with the US banks too.
I can see the headlines from the near future…
BANK OF AMERICA HACKED, LOSES 20000 BITCOINhttps://t.co/SSJyIcHA7P
— Jameson Lopp (@lopp) July 22, 2020
His tweet triggered a rage on twitter. People started thinking of all possible worst-case scenarios. For example, in a situation of crises, banks might refuse to allow customers to withdraw their private keys. They have done this with fiat in the recent past.
Now the community is discussing whether the banks will be selective about the cryptocurrencies to which they will provide custodial services. In case this happens which cryptocurrencies do you think will be offered services first? Do let us know in the comments section below.
Earlier this month, PayPal hinted to provide crypto buy/sell services.