Key Points
- U.S. banks are now allowed to engage in certain crypto activities including custody of digital assets, stablecoin payments, and running blockchain nodes.
- This move reinforces the increasing adoption of blockchain and stablecoins in traditional financial systems.
The OCC (Office of the Comptroller of Currency), an agency in charge of overseeing banks and savings associations, has clarified that U.S. banks are now free to engage in certain crypto activities. These activities include custody of digital assets for customers, stablecoin payments, and running blockchain nodes.
Implications for the Crypto Sector
Rodney E. Wood, an exec at OCC, stated that this action will reduce the burden on banks to engage in crypto-related activities. The OCC has also rescinded prior guidelines that singled out crypto as a liquidity risk for the banking system.
Jeremy Allaire, Founder of Circle (USDC), reacted to the update by expressing excitement about wiring up the existing financial system to the new internet financial system. The update is consistent with the pro-crypto shift under the new Trump administration.
Impact on the Banking System
The previously coordinated banking restriction, known as ‘Operation ChokePoint 2.0,’ blocked banks from participating in the crypto sector. This update could potentially allow top chains to move trillions of dollars (stablecoins) for banks. Market watcher Marty Party noted that this could dent Ripple’s control on banking ledger rails.
The move signifies an increasing adoption of blockchain and stablecoins in traditional financial systems. Major banks like JPMorgan, Goldman Sachs, and BNY Mellon are considering crypto offerings, including custody for U.S spot Bitcoin [BTC] ETFs. This is seen as direct competition to Coinbase.