US Banks Cleared For ‘Riskless’ Crypto Transactions Following OCC Letter
In a brand new main breakthrough for the digital asset business within the United States, the Office of the Comptroller of the Currency (OCC) introduced on Tuesday that nationwide banks are permitted to interact in “riskless principal transactions” involving crypto-assets.
This affirmation comes via the issuance of Interpretive Letter 1188, which outlines the rules for such actions.
OCC’s New Framework
According to the OCC’s guidance, performing as a riskless principal for crypto-assets aligns with the providers that nationwide banks already provide to custody clients.
National banks are actually allowed to purchase and promote each monetary and non-financial belongings held in custody primarily based on buyer instructions, adhering to current agreements and authorized necessities.
Therefore, facilitating the shopping for and promoting of digital belongings for custody clients in a riskless principal capability is basically the identical as performing as an agent for these clients, and it’s acknowledged as a reliable banking exercise.
This new framework implies that clients can transact in crypto-assets via established nationwide banks, offering a extra regulated setting in comparison with exchanges that function outdoors the purview of strict monetary oversight.
Key Concern For Banks In Crypto Transactions
The OCC additionally distinguished between riskless principal transactions in digital belongings and people in conventional securities. The major variations lie within the underlying belongings and the expertise used to facilitate these transactions.
The major concern related to riskless principal transactions is counterparty credit score threat, particularly settlement threat. Similarly, in customer-driven, completely matched spinoff transactions that make the most of transitory title switch, credit score threat is the predominant issue. In the letter, the OCC concluded the next:
As with any exercise, a financial institution that conducts riskless principal crypto-asset transactions should accomplish that in a protected and sound method and in compliance with relevant legislation. The OCC will study riskless principal crypto-asset actions as a part of its ongoing supervisory course of.
Featured picture from DALL-E, chart from TradingView.com
