One of the most important news of the past week may be boldly one of the most positive news of this year. On July 22, the Office of the Comptroller of the Currency (OCC) gave permission to US banks to hold private keys on behalf of their clients. In simplicity, this means that financial institutions in the United States can buy, sell, and hold cryptocurrencies for their clients.
"The right to any unit of the selected cryptocurrency is passed from one person to another thanks to the use of unique cryptographic keys. Thus, no physical instrument will be held, which means that a bank holding digital currencies for its clients will in fact hold access to the cryptographic keys of the cryptocurrency unit."
This part was also mentioned in a letter published by the OCC. The document describes how banks in America will be able to hold cryptocurrencies, what that means from a legal and juridical point of view, but also how the security of the assets should be approached. Brian Brooks, currently one of the leading OCC officials, with management experience from the Coinbase stock exchange, said that banks would have to make sure that cryptocurrencies were kept in secure virtual safes and vaults. Security is thus still a key factor addressed by the OCC.
Nevertheless, this innovation has already caused a stir in the crypto world, mainly because it will facilitate access to this world. People will not have to create accounts on exchanges, create new wallets, and addresses. This new permission can thus speed up the adoption of cryptocurrencies.
Su Zhu, CEO of Three Arrows Capital, thinks so and is very optimistic not just about cryptocurrencies, but also about the growing decentralized finance (DeFi) sector. Su Zhu said that many people would realize how easy it would be now to make a FIAT transfer to a bank account, exchange their funds to a stablecoin there and then participate in the possible profits of DeFi projects.
Interest rates, mainly known as yield and yield farming in DeFi, currently attract a lot of people to cryptocurrencies. Easier access to cryptocurrencies through commercial banks in the US can thus trigger not only the growth of DeFi but also the new bull run of cryptocurrencies.
However, banks' access to cryptocurrencies, which are in competition with this sector, remains questionable. Not so long ago, banks around the world spoke of cryptocurrencies as fraud or a huge bubble. At first, glance, handing over your private key to the bank may seem like a simplification of access to virtual currencies for ordinary people. However, in the crypto world, everyone knows the phrase “NOT YOUR PRIVATE KEY, NOT YOUR BITCOIN”, which in short, means that if you give your private key to anyone else, it's practically the same as giving away your funds. Although we understand how this innovation can positively affect the adoption of cryptocurrencies worldwide, clients who take advantage of this opportunity will literally discard one of the main benefits of cryptocurrencies.