Fintech startups and offshore platforms have been talking a lot about cryptocurrencies lately, but traditional banks have been waiting for regulations to become apparent before they make any moves. The Office of the Comptroller of the Currency (OCC) has made a significant change possible. With the introduction of IL 1183 and the reaffirmation of IL 1170, the U.S. banking system is ready to become a substantial player in cryptocurrency. This move starts a more organized, safe, and controlled crypto world.
Banks and Cryptolocker
Banks are perfect places to store digital assets because they are highly controlled. IL 1170 clarified that national banks could provide custody services for cryptocurrencies, treating them like they would treat other types of protection. In addition to storing digital assets, banks can help with crypto transactions, do taxes and appraisals, and set up risk management systems that fintech companies don’t always have. Banks have been handling money for over a hundred years, so they know how to bring order and security to the volatile world of crypto.
Regulation Obstacles
Even though the OCC has made progress, regulatory problems remain. The OCC, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) all said that banks can’t list coins like Bitcoin as assets on their balance sheets. Because of this restriction, banks can’t fully participate in the cryptocurrency market and can’t use digital assets for investment and risk management. If this rule stays in place, banks can only offer crypto services and not directly participate in the market.
Crypto Investors’ Safety
Adding cryptocurrency to the banking system could stop disasters like those with FTX, BlockFi, and Celsius. Banks are better for investors than unregulated offshore exchanges because they have FDIC insurance, strict rules for following, and more openness. Customers can trade crypto through banks they trust instead of risky sites with little oversight.
Conclusion
The OCC’s decisive steps mark the beginning of cryptocurrency’s widespread use in the traditional banking system. The financial world is changing because national banks can now handle crypto trades. However, there are still problems, such as governmental problems and unstable markets. Banks could become the long-awaited link between Main Street and the blockchain if they combine their stability with crypto’s new ideas.
