In July, the United States Office of the Comptroller of the Currency (OCC) issued a letter clarifying that banks can engage in custodial services for digital currency — an important step worthy of applause, and welcome news for those invested in the future of the digital currency asset class.
For years, banks have avoided holding custody of digital currencies because of regulatory uncertainty. Now, the OCC is shifting that paradigm and the message is reassuring: not only do banks have the capacity to assist in the growing digital asset class, but they can also be a part of its future. The OCC’s decision has been long-awaited because clear regulatory guidance is precisely what the market needs for major institutional players to come off the sidelines.
While the OCC’s decision is commendable, we also know that acting Comptrollers come and go depending on which administration is at the helm, and with an election just around the bend, this promising guidance is far from set in stone. Formalizing regulatory rules relative to the ability of banks to be custodians of digital currency is the next big and necessary step, and could further inject the confidence the industry needs for leading financial institutions to feel safe participating and holding digital currency keys and other digital assets.
The OCC’s guidance comes at a critical time as more and more Americans are choosing to own and use digital currencies. Today about nine percent of Americans are bitcoin owners and the number of global blockchain wallet users have jumped from 6.7 million in 2016 to over 34 million in 2019. That this asset class is here to stay is no longer a question — the question is how will major financial institutions adapt and participate in its exploding growth.
Custodians like Etana also have an important role to play in building greater confidence and support for this ecosystem. As both banks and consumers continue to engage with digital currency at a growing pace, the security of those assets, and the need for trusted intermediaries to settle transactions and trades becomes paramount. At Etana, we are committed to bringing the full strength of the financial industry’s best practices for privacy and reliability to keep our clients’ assets safe and ensure that the financial institutions we work with can feel confident that they are meeting the necessary regulatory requirements to serve clients in this growing space.
Brandon Russell is the CEO of Etana Custody Ltd. Etana is a secure custodian for fiat and digital currency and a trusted partner to clients and institutions across the globe.