Banks Can Now Hold Bitcoin, Here’s Why It’s ‘Insanely Bullish’
As we reported yesterday, a leading banking regulator, the Office of the Comptroller of the Currency (OCC), has officially declared in a letter that national banks can from now provide crypto custody services.
“From safe-deposit boxes to virtual vaults, we must ensure banks can meet the financial services needs of their customers today,” said Acting Comptroller of the Currency Brian Brooks, who previously served as the chief legal officer for crypto exchange Coinbase, in a statement.
OCC’s new decision provides further entry for traditional banks in the crypto space. Banks can provide such services to crypto businesses as long as they follow relevant laws that involve those pertaining to money laundering and terrorism financing.
Barry Silber, the founder and CEO of Digital Currency Group, the parent company of Grayscale Investments and Genesis Trading, took to Twitter to share pleasure over this development.
I'm looking forward to getting my ass kissed by all the banks now
— Barry Silbert (@barrysilbert) July 22, 2020
Bitcoin & Crypto's coming to a bank near you!
The news holds significance because regulatory uncertainty has been the primary reason why institutional investors have been keeping away from digital currencies and has been forcing many businesses in the crypto space to not serve US customers.
For instance, a recent FCA survey revealed that 73.2% of consumers that do not currently own but plan to purchase cryptos in the future said that the lack of regulatory protection had impacted their decision not to buy cryptos to date.
Regulator uncertainty was also what led major banks to avoid bitcoin. The bylaws of many big investment funds, including pension funds, require them to park their clients’ money only with federally chartered banks.
Cryptocurrency custody is a lucrative business as custodians typically charge fees of around 0.25% to keep the funds, in this case, BTC, safe.
This means, “firms like BlockFi, Coinbase may now want to become banks to be able to receive banking deposits directly without needing intermediaries,” said Su Zhu, CEO of Three Arrows Capital.
US banks being able to offer custody is insanely bullish bc it means the guys like signature/silvergate could onboard fiat deposits -> convert to stablecoin ->get yield in DeFi
Incumbents will see this growth and then join
It gives a biz model for crypto custodians finally
— Su Zhu (@zhusu) July 22, 2020
“Approving digital currency companies to operate under a national bank charter will spur innovation, enhance American competitiveness within the global financial technology sector, improve protections for consumers of digital currency services, and promote the development of tools and platforms that can bolster financial inclusion,” says Coin Center.
However, some argue that it defies the whole purpose of ‘be your own bank’ and ‘not your keys, not your bitcoin.’
“The OCC letter also opens the door for banks to offer more exotic services such as ‘staking’” — a hot trend in the crypto market, says Fortune.
“When a shitcoin gets listed on Coinbase or Binance it usually gets a huge pump. Bitcoin just got listed on the entire US banking system,” wondered one crypto enthusiast.
Bitcoin may not have pumped hard this week, but the leading digital asset is seeing greens. First, it recorded an uptick of 3% on Tuesday than yesterday, in nearly a month, Bitcoin jumped to $9,500 for the first time. So, in the current environment, this could be the start of something big.