Bitcoin and other cryptocurrencies have long sought legitimacy in a world of fiat currencies. In the United States they just got a big boost.
On July 22 the Office of the Comptroller of the Currency (OCC) announced that national banks and federal savings associations were authorized “to provide cryptocurrency services for customers.”
To say this is an important development for cryptocurrencies would be a gross understatement.
National and state banks and thrifts have long provided the custody of both physical and electronic assets, the latter having been authorized in 1998.
Now the OCC has concluded 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.”
Obviously cryptocurrencies are not a physical asset, but you could have created one by storing your crypto on a cold wallet (such as those sold by Trezor, Ledger or Nano) and then stored that device in a safe deposit box.
The difference is banks are now authorized to provide custody services directly, instead of you storing your crypto on an exchange or crypto wallet (hot or cold).
“Crypto custody services may extend beyond passively holding ‘keys’,” the OCC stated. In other words, banks can now offer standard physical security (safe deposit boxes) as well as virtual vaults.
The OCC ruling recognizes the movement toward digital currencies, whether fiat or crypto. This recognition and authority by the national banking authority follows a similar move by some individual states, such as Wyoming.
The significance of this is that more people will soon be able to buy and sell cryptocurrencies as easily as stocks and bonds and now they’ll have the ability to store their holdings in the same bank as their savings account.
This change will make it very easy to transfer funds within your regular bank and not have to struggle with transfers between crypto exchanges and your bank.
A new crypto bull market
The cryptocurrency market continues to mature and with this ruling we can see an additional foundational decision that will support the next growth spurt in the crypto market.
The last great bull market for cryptocurrencies was 2016 to 2017 and was primarily a result of retail traders (not institutional traders) becoming more involved in the market. It was a time when buying and selling cryptocurrencies was still onerous. Yet we still experienced a very strong bull market.
The next major bull market started in 2020 and is expected to run into 2021 and 2022. This time it will be driven by both retail and institutional investors, both of whom will have a much easier time buying, selling, and storing their holdings.
Many will be looking to use cryptocurrencies instead of fiat currencies, especially as we experience a devaluation of fiat currencies from massive printing by central banks. With the ability for banks to now hold cryptocurrencies, people will have an easier time to transact in crypto instead of fiat.
For those who want to be crypto “hodlers,” being able to safely store your holdings in the same bank as your regular savings bank is plus, and that also will pull in additional investors.
All of this is to say I continue to see the strengthening of the foundation that will support the next period of explosive growth. Now seems like a great time to invest in cryptocurrency and get in front of the crowd before prices head much higher.