Cryptocurrency Custody Services News – On July 22, Jonathan Gould – the Senior Counsel and Deputy Controller of The Office of the Comptroller of the Currency (OCC) released an announcement in favor of the crypto community.
In the written directive, Mr. Gould authorized all registered banks nationwide to start accepting cryptographic keys. With such authorization, banks may begin providing cryptocurrency Custody Services to their clients.
What is cryptocurrency custody?
Before diving deeper into the authorization, let’s define crypto custody, in layman’s terms. CC services are method of storing digital currencies.
A bank or financial firm may offer large investors, institutions, corporations, or high net-worth clients the options to store their digital assets.
Stored in hardware and software wallet, these storage devices usually kept offline in order to keep the assets from hackers’ reach.
Below is a chart with different types of cryptocurrency custody services:
List of approved cryptocurrency custody service providers:
BitGo – launched in 2013, BitGo is an established digital assets exchange . At the time of this publication, BitGo has 100+ digital assets.
Coinbase dominates the crypto custody business with its offering of institutional-grade solutions. The firm currently holds more than $7 billion worth for its clients.
Gemini – founded by the Winklevos twins (Cameron/Tyler), Gemini is a New York-based legal entity. With all the licenses to operate digital exchanges and crypto custody services in the United States, it’s save to invest with Gemini.
Major news & development for the crypto community
The announcement is major development for the cryptocurrency industry. Prior to this directive, crypto custody services often reserved for big and established crypto firms listed above.
Previously, the tedious, long, and dry out process to obtain required state licenses to operate crypto custody services kept financial institutions away.
However, with the new relaxed rules, regulated financial firms can easily obtain the required certificates. US-based Banks already in possession of the majority of licenses due to the nature of the current business.
Targeting major United States-based banks?
The release, which seems to be targeting major banks, states that firms “may offer more secure storage services compared to existing options.”
“Providing custody for cryptocurrencies would differ in several respects from other custody activities,” the letter outlined.
Furthermore, the letter calls for the development of cryptocurrency custody-based digital wallets on the blockchain.
“The OCC recognizes that, as the financial markets become increasingly technological, there will likely be increasing need for banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers.”
The #1 US-based bank, JPMorgan Chase is already position to lead cryptocurrency custody because the financial powerhouse already provides crypto-based services to crypto exchanges, Coinbase and Gemini.
Faith Obafemim tech lawyer, digital content consultant, blockchain & crypto researcher, emerging tech tech writer. She is currently doing research on the implementation of the African Continental Free Trade Agreement (AfCFTA) on the blockchain and recommending Kleros as a dispute resolution layer.