US Banks Cleared For ‘Riskless’ Crypto Transactions Following OCC Letter | Bitcoinist.com

Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure In a new major breakthrough for the digital asset industry in the United States, the Office of the Comptroller of the Currency (OCC) announced on Tuesday that national banks are permitted to engage in “riskless principal transactions” involving crypto-assets

This confirmation comes through the issuance of Interpretive Letter 1188, which outlines the guidelines for such activities.

OCC’s New Framework

According to the OCC’s guidance, acting as a riskless principal for crypto-assets aligns with the services that national banks already offer to custody customers

Related Reading: New CFTC Crypto Initiative: Bitcoin, Ethereum, To Serve As Collateral In Derivatives TradingNational banks are now allowed to buy and sell both financial and non-financial assets held in custody based on customer directions, adhering to existing agreements and legal requirements

Therefore, facilitating the buying and selling of digital assets for custody customers in a riskless principal capacity is essentially the same as acting as an agent for those customers, and it is acknowledged as a legitimate banking activity.

This new framework means that customers can transact in crypto-assets through established national banks, providing a more regulated environment compared to exchanges that operate outside the purview of strict financial oversight

Key Concern For Banks In Crypto Transactions

The OCC also distinguished between riskless principal transactions in digital assets and those in traditional securities. The primary differences lie in the underlying assets and the technology used to facilitate these transactions

Related Reading: CEOs Of Leading Banks To Discuss Crypto Market Structure With US Senators This WeekThe main concern associated with riskless principal transactions is counterparty credit risk, especially settlement risk. Similarly, in customer-driven, perfectly matched derivative transactions that utilize transitory title transfer, credit risk is the predominant factor. In the letter, the OCC concluded the following:

As with any activity, a bank that conducts riskless principal crypto-asset transactions must do so in a safe and sound manner and in compliance with applicable law. The OCC will examine riskless principal crypto-asset activities as part of its ongoing supervisory process.

The daily chart shows the total crypto market cap recovery toward $3.18 trillion. Source: TOTAL on TradingView.comFeatured image from DALL-E, chart from TradingView.com

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