The Current Status and Trends of Banks Providing Cryptocurrency Custody Services
As the cryptocurrency market continues to grow, banks are increasingly exploring the provision of cryptocurrency custody services. This article examines the current status and trends in this area, including regulatory developments, motivations for banks, service models, advantages, challenges, and future outlook.
Gradual Relaxation of Regulatory Policies
In the United States, in May 2025, the Office of the Comptroller of the Currency (OCC) issued an interpretive letter clarifying that banks can provide cryptocurrency custody services. This move was complemented by the Federal Reserve Board’s decision to ease relevant restrictions, allowing state member banks to engage in digital asset-related activities without prior approval.
The EU’s Markets in Crypto-Assets (MiCA) regulation has provided a clear compliance framework for cryptocurrency custody services, promoting the standardized development of this field.
Motivations for Banks to Provide Cryptocurrency Custody Services
Driven by Customer Demand
With cryptocurrencies becoming a mainstream asset class, customer demand for banks to provide cryptocurrency custody services is on the rise. Banks can prevent customer attrition to cryptocurrency-native financial institutions and attract clients who wish to integrate traditional assets with digital assets.
Expanding Business Scope
Cryptocurrency custody serves as the foundation for banks to enter the broader digital asset service field. Banks can further offer value-added services such as staking, digital asset yield generation, enhanced analysis, and reporting, thereby increasing revenue streams.
Enhancing Wealth Management Capabilities
Through cryptocurrency custody services, banks can gain a more comprehensive understanding of their customers’ financial situations, providing more accurate net worth assessments and customized financial services.
Models of Cryptocurrency Custody Services Provided by Banks
Direct Custody
Banks establish their own custody infrastructure and are responsible for the storage and management of cryptocurrencies. This model requires strong technical capabilities and security measures.
Delegated Custody
Banks outsource cryptocurrency custody services to professional third-party custody institutions. This model can reduce technological and operational costs but requires ensuring the reliability and compliance of the third-party institutions.
Collaborative Model
Banks collaborate with professional cryptocurrency custody service providers, offering services through white-label solutions. This model combines the brand advantages of banks with the technical capabilities of specialized institutions.
Advantages of Banks Providing Cryptocurrency Custody Services
High Security
Banks can leverage their existing security infrastructure and technology, such as hardware security modules (HSM) and multi-layer security measures, to provide institutional-level security for customers.
Strong Compliance
When providing cryptocurrency custody services, banks must comply with strict regulatory requirements, which helps ensure the legality and compliance of the services.
Robust Technology Infrastructure
Banks can utilize their existing core banking systems and modernize them to support cryptocurrency wallet systems and integration with public blockchains.
Challenges Faced by Banks in Providing Cryptocurrency Custody Services
High Technical Requirements
Banks need advanced technology infrastructure to support the storage, management, and trading of cryptocurrencies. This may require significant technological investment and professional talent support.
Complex Risk Management
The cryptocurrency market is highly volatile and uncertain, and banks need to establish a comprehensive risk management framework to deal with market risks, credit risks, and technological risks.
Complex Regulatory Environment
Regulatory requirements vary across different countries and regions, and banks need to closely monitor changes in regulatory policies and ensure that their services comply with local laws and regulations.
Future Outlook
With the continuous development of the cryptocurrency market and the gradual improvement of the regulatory environment, it is expected that more and more banks will enter the cryptocurrency custody field. By providing cryptocurrency custody services, banks can not only meet customer needs and expand their business scope but also lay the foundation for future blockchain applications.
Conclusion
The provision of cryptocurrency custody services by banks represents a significant step towards the integration of traditional finance and digital assets. As regulatory frameworks become more supportive and customer demand continues to grow, banks are well-positioned to play a crucial role in the evolving cryptocurrency ecosystem.
