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In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Cryptocurrency

US Banks Enter Cryptocurrency Business Sort of?

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A federal agency says you can now keep cryptocurrency in American banks. However, US banks cannot create or issue cryptocurrency. Nor can you keep cryptocurrency in a federally insured bank account.

Instead, you can store your cryptocurrency in a safe deposit box, or a bank’s computer system. Thus, you could put your Bitcoin (BTC) in a hardware wallet, store the wallet in a safe deposit box, and the bank could insure it. However, the bank will not handle or manage the cryptocurrency.

To elaborate the Office of the Comptroller of the Currency (OCC) gave federally chartered U.S. banks permission to store cryptocurrency products. An OCC press release states: “the OCC concludes that providing cryptocurrency custody services, including holding unique cryptographic keys associated with cryptocurrency, is a modern form of traditional bank activities related to custody services. Crypto custody services may extend beyond passively holding “keys.”

Will Banks Sell Cryptocurrency?

In the release Acting Comptroller of the Currency, Brian P. Brooks says banks can store cryptocurrency in safe deposit boxes and digital vaults. However, Brooks fails to define the term digital vault. I guess a digital vault is a large cryptocurrency hardware wallet a bank operates.

I think this announcement means that banks could advertise storage of your cryptocurrency or offer insured cryptocurrency storage. However, you cannot buy Ethereum (ETH) or EOS (EOS) through your checking account anytime soon. Importantly, the OCC did not give banks permission to create or issue cryptocurrencies or stablecoins.

The Comptroller of the Currency regulates federally chartered banks and thrifts (savings and loans) in the United States. However, the OCC does not insure bank accounts as the Federal Deposit Insurance Corporation (FDIC) does.

Unfortunately, the OCC press release says nothing about stablecoins. A stablecoin is a cryptocurrency that contains a digital robot that makes payments in fiat currency held in a bank trust account. Thus, I conclude the OCC does not approve of stablecoins.

I conclude that America’s bank regulators are trying to avoid cryptocurrency. However, I think bank regulators will have to deal with cryptocurrency soon because of the speed at which blockchain technology is developing.

Originally published at https://geekcrunch.reviews on July 28, 2020.