Treasury Bureau Declares National Banks Can Custody Crypto

The Office of the Comptroller of the Currency (OCC), a bureau within the U.S. Department of the Treasury tasked with regulating the country’s banks and thrift institutions, has published a public letter clarifying that national banks and savings associations can provide cryptocurrency custody services to clients.

“In the letter published today, the OCC concludes that providing cryptocurrency custody services, including holding the unique cryptographic keys associated with cryptocurrency, is a modern form of traditional bank activities related to custody services,” according to an announcement from the bureau. “Crypto custody services may extend beyond passively holding ‘keys.’”

Custody of cryptocurrency like bitcoin is entirely a matter of controlling the private keys associated with that cryptocurrency. As a purely digital entity, bitcoin is only accessible through Bitcoin addresses, which contain two keys: a “public key” and a “private key.” While public keys are shared in order to receive bitcoin transactions, private keys should be protected, as they allow holders to send bitcoin — ultimately determining the custody of the coins.

Prior to this clarification, only firms with special licenses could control the custody of cryptocurrency on behalf of clients. The announcement suggests that now, any federally-regulated institution providing similar services for traditional assets can do so as well.

This could be the first step in a significant wave of new cryptocurrency services offered by U.S. banks like Wells Fargo or Bank of America. They could, for instance, begin providing multisig wallet services. In the announcement, the OCC framed the clarification as a natural step for these institutions to continue meeting customer needs in the digital age.

“From safe-deposit boxes to virtual vaults, we must ensure banks can meet the financial services needs of their customers today,” said Brian P. Brooks, the acting comptroller of the currency, per the announcement. “This opinion clarifies that banks can continue satisfying their customers’ needs for safeguarding their most valuable assets, which today for tens of millions of Americans includes cryptocurrency.”

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