The Office of the Comptroller of the Currency – Cryptocurrency Custody Services
As the financial markets become increasingly digitized, the Office of the Comptroller (OCC) has recognized the necessity to allow national banks and other institutions, such as federal savings associations, to provide traditional banking services on behalf of customers as they relate to cryptocurrencies.
The OCC issued an interpretive letter on July 22, 2020, which reaffirms its position that national banks, including federal savings associations, “may provide permissible banking services to any lawful business they choose, including cryptocurrency businesses, so long as they effectively manage the risks and comply with applicable law.” The interpretive letter concludes that providing cryptocurrency custody services is a modern form of traditional banking as “national banks have long provided safekeeping and custody services for a wide variety of customer assets, including both physical objects and electronic assets.”
With more Americans (a recent survey indicates that almost 40 million Americans own cryptocurrencies) and institutional investors investing in cryptocurrencies, the OCC recognized the need and growing demand for safe places for investors to store and protect their cryptocurrencies. One of the most basic and fundamental services provided by banks is safekeeping and custody services. Compared to the current cryptocurrency storage options, the OCC believes that investors will welcome the more secure storage services provided by traditional banks.
The OCC’s interpretive letter also will have an impact on the internal controls that banks will need to have in place in order to custody cryptocurrencies. In addition, auditors may need to apply specialized audit procedures as it relates to the banks’ internal controls with respect to the custody of cryptocurrencies.
Do not wait. Contact your PKF O’Connor Davies team.
Kevin Keane Jr., CPA
Victor Peña, CPA, CGMA
Michael A. Provini, CPA