December 8, 2023

US banks receive permission to store cryptocurrencies

US banks receive permission to store cryptocurrencies

The U.S. Office of the Comptroller of the Currency (OCC) has authorized federal savings associations andnational banks to storecryptocurrencies in the interests of their clients, writes The Block. According to the OCC, this type of service represents "a modern form of traditional banking related to custody services."

The notice was submitted together witha cover letter that explains the reasons for the OCC's decision. The regulator refers to the request "regarding the powers of the national bank to provide clients with a cryptocurrency storage service."

“Since digital currencies only exist inblockchain or distributed ledger, physical possession of such a tool is impossible. Instead, the right to a single unit of digital currency is transferred between parties through unique cryptographic keys. Thus, a bank "holding" digital currencies in the interests of its client actually takes possession of the cryptographic access key to this unit of cryptocurrency ", - says the explanation.

OCC also notes that banks can storea wide range of assets as custodians, including “unique and difficult to value”. These include, but are not limited to, “assets that are transferred electronically”.

"Provision of custodian services forcryptocurrencies fall into this category of well-established security and custody powers. This is an acceptable form of traditional banking activities that national banks are allowed to engage in electronically. ", - adds the department.

At the same time, the regulator warns that anyA cryptocurrency custodian should develop and implement appropriate risk management mechanisms, policies, procedures, internal controls, and information management systems, and follow OCC guidelines that apply to their overall operations.

Brian Brooks, current Comptroller of the Currency and Former Counsel for Coinbase, said in a comment on today's announcement:

“We must ensure that banks canmeet the modern needs of its clients in the financial services industry, from safe deposit boxes to virtual vaults. This statement explains that banks can continue to meet the needs of their customers to secure their most valuable assets, which today include cryptocurrencies for tens of millions of Americans. ”

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