The news that U.S. Banks are now allowed to hold cryptocurrency has caused a ‘ripple effect’ in the industry. Announced by the Office of the Comptroller of the Currency (OCC), headed by former Coinbase executive Brian Brooks, the news marks a new development in the industry, where crypto custody was once towered by the likes of Coinbase.
Custody is often talked about side by side institutional investors. In earlier reports, it appears that many institutional investors would like to have their crypto assets held by reputable third parties, instead of handing the keys to the digital assets itself. The notion is that these are traditional finance folks who do not like the idea of alphanumeric private keys and mnemonic phrases.
At the moment, Coinbase reportedly has a lot of cryptocurrencies held in its vault.
Ripple is presumably an important player in this news because the company has been working with banks and, by extension, traditional financial players. Its partnership with the likes of Moneygram allows it to be the facilitator of global money transfer at a fraction of a fee vs traditional means. Ripple is also an ally to PayID, which sets to standardize how people send money.
In a statement posted on Twitter, Ripple CEO Brad Garlinghouse welcomed the news as a ‘huge step forward’. He remarked on how the OCC had the lead in the way in fostering innovation and providing a level playing field. Garlinghouse also said, “the future has never been fiat versus crypto – these can coexist in harmony.”
BOOM! Today’s ruling is a huge step forward. The @USOCC is absolutely leading the way to foster innovation, protect consumers and provide a level playing field for all. The future has never been fiat versus crypto – these can and should coexist in harmony! https://t.co/tlzVZrqcRj
— Brad Garlinghouse (@bgarlinghouse) July 22, 2020
His statement might not be welcomed by those who want to fully remove banks in the equation of finance, but certainly, the news is bullish for crypto. For one, large traditional investors will trust banks more than, say, a regulated crypto exchange.
Some banks probably have hundreds of years of history behind them, making them trustworthy. Some investors might be dealing with the same bank just as their predecessors did with their old money. These banks already keep their stock certificates, probably. They will trust banks more to hold their cryptocurrency keys.
Going back to Ripple, the news was welcomed by the XRP community, who thinks XRP has an advantage because Ripple primarily works with banks hence will empower institutional investors who have been keen to get in. This is because the OCC also stated that crypto custody services that banks can offer ‘may extend beyond passively holdings keys’. It is not clear how and what will be activities beyond passive holdings, but the XRP community on Twitter collectively thinks that this effectively removes anything that stops Americans from buying and holding XRP.
It should be noted, however, that while the XRP community may be right that this news benefits XRP, it actually avails the entire crypto market. Many would argue that it benefits Bitcoin more since it’s the digital asset that large investors are buying and selling. For XRP to ‘highly’ benefit on this bank custody of crypto assets, it will depend on Ripple’s ability to engage with its partner banks to consider XRP when prioritizing which coins to custody.
XRP is currently up 4.73 percent from yesterday.
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