Traditional Financial Companies to Benefit from Cryptocurrency Custodians in US Regulation

02/22/2023 05:30 • Digital Disruptors • 88 views

On February 22, Bloomberg reported that traditional financial companies and their supported cryptocurrency custodians are most likely to benefit from the proposed changes in the regulation of the protection of digital assets in the United States, due to the existing license portfolio and the trustworthy reputation in handling customer funds.

Bloomberg: Traditional financial companies are most likely to benefit from the new regulations on encryption and custody in the United States

Analysis based on this information:

Bloomberg, the famous business news organization, reported on February 22nd that traditional financial companies and their supported cryptocurrency custodians are poised to benefit from proposed regulatory changes on the protection of digital assets under U.S. laws. It has been pointed out that existing license portfolios and their trustworthy reputation in handling customer funds give them an edge over other companies operating in the same space.

The new regulatory changes announced this year by the Office of the Comptroller of the Currency (OCC) demand that banks and other financial institutions take measures to keep customer assets safe. The OCC has classified digital assets, including cryptocurrencies, as valuable commodities, which further highlights the need for tighter regulation. This regulatory environment bodes well for traditional companies, since they are already operating with licenses issued by financial regulators and possess years of experience managing customer funds. By contrast, other digital asset management firms must go through lengthy licensing and accreditation processes to earn customers’ trust.

As it is, this report shows that well-established banks and their cryptocurrency custody partners have a competitive advantage in the market due to their established business practices and regulatory compliance. These companies usually have robust digital asset management solutions and provide safe storage for customer assets. The OCC guidelines aim to ensure that any organization that wants to provide digital asset services must maintain adequate safety standards to protect customer assets. The established financial institutions already meet these requirements and are ready to move their cryptocurrency products into the mainstream.

In conclusion, traditional financial companies and their cryptocurrency custodians, are expected to win big with the proposed regulatory changes in the United States, thanks to their existing licensing and respective trustworthiness in handling customer funds. Because of this, institutions make a stronger case for offering digital asset services than newer competitors, and the new regulation should provide additional customer assurance for their existing services. Nevertheless, the regulatory landscape for digital assets remains comparatively new, and organizations are still adapting as they seek to navigate an ever-changing and evolving environment.

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