On July 22, the Office of the Comptroller of the Currency, the US Department of the Treasury, which oversees banking operations in the country, issued an explanatory message stating that locally licensed banks are allowed to provide cryptocurrency services to their clients, distributed over cryptographic data storage. Currency-linked keys.
In its message, OCC recognizes the current need of banks and other financial service providers to use blockchain technology and provide related services to its clients. In addition to national banks, this license extends to state-owned banks and loan / savings societies, also known as “charities.”
What will change?
In particular, the move, coupled with news of an expected stimulus of $ 2 trillion from the Federal Reserve, pushed the bitcoin price (BTC) above the $ 11,000 mark. However, the result may not be just short-lived. Hongfang, CEO of OKCoin – a global digital currency exchange – which highlights the importance of the move, told Cointelegraph:
“OCC has achieved an important milestone in enabling traditional banks to provide cryptographic storage services, thereby enhancing the overall economic system and expanding economic access. Although the government letter did not introduce new regulations, it did provide very much needed clarifications regarding the provision of cryptocurrency custody services by national banks. ”
Fang said the latest decision was strongly influenced by the currency's current observer, Brian Brooks, the former head of US currency exchange, Coinbase. His background in legal, regulatory, and government jobs allowed him to better understand the aspects of crypto custody in the American financial system: “Brian Brooks’ auditor's security-focused remarks will help the United States remain a leader in the global economic landscape.”
Impact on institutional investors
This development has a major impact on institutional investors, who are often skeptical of new industries such as cryptography. This is a step towards crypto assets, which are considered a legitimate asset class by major banks, payment companies and clearing houses. Sam Winner, Head of Cryptoassette Services at KPMG, discussed the impact of this announcement on institutional investors with Cointelegraph, citing the nature of the custodian department:
“Retention is a paid business, and the organizational support behind a new paid business makes it more attractive. Institutional cryptocurrencies continue to grow in size, maturity, and sophistication, which drives the need for preservation services. Market uncertainty increases the appeal of a new paid new product.”
The world's leading banks in the United States already have strong infrastructure and platforms for traditional preservation business, and crypto security can divide this base, according to Weiner, who added, “The development of crypto infrastructure will now allow banks to maintain premium assets in a future.”
Given the payment options for custody offered by this step, institutional actors are perhaps the largest donors. The complex effect of this increase in interest will inevitably affect retail investors, so that they can increase the share of digital currencies in their individual portfolios. “I look forward to seeing more and more banks become more open to cryptocurrencies, with better banking channels, increased public awareness, and greater clarity in government. The best user experience ultimately wins,” Fang added.
The largest institutional crypto exchange, Bakkt, has broken daily BTC volume record futures twice in the past two days, and the volume of the BTC option peaking for all Deribit may also show signs of increased interest. However, a clear direction must be identified before making any decision.
An opportunity for banks?
Earlier this year, 40 German banks approached regulators to express their interest in obtaining cryptocurrency licenses, and the German Federal Financial Supervisory Authority, or BaFin, issued guidelines in March stating that companies can only be called in for incubators if they have access To the customer. Private keys that can get rid of vendors who see encrypted keys. Despite this interest, Crypto Storage AG CEO said it was extremely difficult for the company to even open a bank account in the country because the banks did not understand the nature of the crypto industry.