The Office of the Comptroller of the Currency (OCC), a key federal banking regulator, issued an interpretation letter in 2020 that provided significant clarification for national banks and federal savings associations. The letter confirmed that these institutions have the power to hold cryptocurrency assets on behalf of their customers.
This power is not intended for investments or cryptocurrency trading in general on behalf of a customer. Instead, it specifically allows banks to hold unique cryptographic keys associated with cryptocurrencies. This custodial service is a modern extension of traditional banking functions, akin to holding physical assets like stock certificates or safes. By managing these keys, banks provide a secure vault for digital assets, a service increasingly demanded by their clientele.
A critical application of this power, explicitly mentioned by the OCC, is the holding of cryptocurrencies to facilitate customer payments. In the blockchain world, every transaction, such as transferring a non-fungible token (NFT) or executing a smart contract, requires network fees, known as "gas fees." These fees must be paid in the native cryptocurrency of that blockchain (for example, ETH on Ethereum). The OCC's guidelines confirm that a bank can hold a reserve of this crypto to pay these gas fees for its customers, ensuring their transactions are processed smoothly without the customer needing to manage the volatile asset themselves.
This decision has been a decisive step in linking traditional finance to the digital asset ecosystem, providing a regulatory pathway for banks to offer essential services for the growing cryptocurrency market.
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