US banking authorities have published an official framework for the custody of cryptocurrencies. Banks will be able to offer this service, provided they comply with strict security and compliance rules.
US banks will soon be able to offer Bitcoin and cryptocurrency custody services
For many years, cryptocurrency enthusiasts have been saying that institutional adoption will make cryptocurrencies more accessible. With the arrival of spot Bitcoin ETFs and the buzz around companies adding Bitcoin to their treasuries, this adoption finally seems to be happening.
Until now, however, banking institutions have been limited in the cryptocurrency-related services they could offer due to the lack of a clear regulatory framework. Some initiatives existed, but were subject to interpretation and case-by-case approval by regulators.
Yesterday, the main US banking authorities, the Federal Reserve (Fed), the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) published a document providing guidance on the custody of cryptocurrencies by financial institutions.
This statement, while not creating new regulations, clarifies expectations for risk management and legal compliance (AML/BSA/OFAC).
This document marks an important step forward: it confirms that banks can offer crypto-asset custody services by taking direct control of private keys.
This authorization is strictly conditional on the implementation of a robust security and audit framework. Regulators emphasize and warn about the technological complexity, cybersecurity risks, and volatility of the assets, while reiterating that banks remain responsible for the actions of their subcontractors.
In short, this announcement does not pave the way for the immediate widespread adoption of bank self-custody, but it does formalize its feasibility.
However, the adoption of Bitcoin by banking institutions also opens the door to certain abuses that Satoshi Nakamoto sought to avoid when he created this blockchain.
Why entrusting your bitcoins to a bank is probably one of the worst ideas ever
Holding your Bitcoins through a bank presents risks comparable to those of an exchange platform, with the added systemic risk inherent in the traditional monetary system.
The history of Bitcoin has shown that trusting a third party to hold your BTC is often a mistake. Mt. Gox, Bitcoinica, and FTX are examples of this… all cases where security failed, despite regulations and audits.
Entrusting the custody of your Bitcoins to a traditional bank exposes you not only to the risks of hacking or censorship, but also to those specific to the banking sector: bank runs, bankruptcies, asset freezes. Lehman Brothers and Silicon Valley Bank are examples of this… all cases where security failed, despite regulations and audits.
It is therefore essential to remember that Bitcoin was designed to allow everyone to hold their funds without depending on an intermediary. Self-custody remains, even today, the safest way to store your BTC.
