On July 22, Jonathan Gould, senior legal counsel for the Currency Control Bureau (OCC) issued a public letter authorizing domestic banks to provide cryptocurrency storage services.
This letter contains detailed information that banks have access to cryptocurrency wallets. This allows them to hold digital assets on behalf of their clients.
“Domestic banks can store the encryption keys used in connection with digital certificates as the key custody service is functionally equivalent to physical custody.”
This event is very important for the cryptocurrency industry due to the fact that so far deposits have been held by private cryptocurrency exchanges such as Coinbase. In most cases, they needed a state-granted license to hold assets owned by large corporations.
Jonathan Gould added in his letter that banks are able to provide greater security for the safekeeping of assets from private competitors, and both clients and investment advisors may want to try to use their services. They would be sure that they would not lose access to their funds. However, the provision of fiduciary services in the context of cryptocurrencies would differ in several respects from other types of assets.
OCC is currently headed by Brian Brooks, a former Coinbase contractor who joined the project earlier this year. He has been a Komptroler since the beginning of summer and has already proposed a number of reforms that would be beneficial for cryptocurrency exchanges. He intends to introduce, inter alia, a national payment card that will allow startups to bypass the “State by state” concept of acquiring money transmission licenses if they provide payment services.
The information contained in the document also indicates that domestic banks have the possibility to provide banking services to companies specializing in any industries, including those related to cryptocurrencies. The condition is that companies operate in accordance with applicable regulations.
The Competition and Consumer Protection Office recognized that financial markets are developing rapidly in terms of technology. Which means that banks and providers of other technologies are forced to introduce innovative ways of offering their services. In contrast, banks entering the crypto space should now develop and implement their fiduciary services in line with sound risk management practices, aligning them with their overall business plans and strategies.