In short
- The custody of digital assets Anchorage has received an OCC trust letter.
- Kraken and Avanti received permits from Wyoming banks to become special-purpose depository institutions.
- But the two cards have different purposes.
Yesterday, the Office of the Currency Controller, a US Treasury office charged with regulating national financial institutions, granted crypto custody firm Anchorage conditional approval to become the Anchorage Digital Bank.
As a result, Anchorage will become the first national encryption bank.
From a national letter sounds greater than a state charter, are Kraken Bank and Avanti Bank & Trust rethinking their strategies for seeking bank authorization letters in Wyoming?
Not at all.
“We are delighted to see other mission-oriented crypto projects opening new avenues for compliance,” said Kraken Legal Director Marco Santori. Decrypt. “The Wyoming approach remains an excellent choice for Kraken, and we look forward to sharing our next steps soon.”
What exactly is Wyoming’s approach – and is it better?
Avanti’s founder and CEO, Caitlin Long, said Wyoming’s special-purpose depository institutions (SPDIs) are above OCC charter companies in the U.S. banking pecking order because OCC trust companies cannot accept deposits from customers. . Depository institutions for special purposes can (is in the name).
So why did Anchorage have so much work when it can’t accept deposits? Long said Decrypt, the term “bank” is actually an improper name when applied to OCC trust letters. By obtaining such a letter, Anchorage is trying to solve a different set of problems than Avanti or Kraken.
State-licensed trust companies end up with several regulators, she said, many with conflicting regulations, as they must seek money transfer licenses in several states. Anchorage now has only one regulator.
“In some states, money transmitters are required to act as fiduciaries, but fiduciary companies often do not act as fiduciaries and expressly waive any fiduciary liability,” she said. Decrypt. “So we saw the same company claim that it is not a fiduciary in one state, but it agrees that it is in another state.”
The OCC’s Trust Statute removes related legal and compliance issues. In addition, while state-licensed trust companies may or may not count as qualified custodians in the eyes of the SEC, “OCC trust banks meet the requirements.” It is a solid strategy for Anchorage. (Anchorage did not respond to Decryptrequest for comment from.)
But trustworthy OCC companies cannot access the Federal Reserve’s payment system, which removes counterparty risk and allows for product innovation, Long tweeted. She cited the example of a US dollar that could be resolved as a cryptography in terms of time and purpose.
By having a charter in Wyoming, Avanti can still search for such a product, which would not happen with an OCC charter.
She should have known – she helped draft Wyoming laws that made it possible to move from Avanti to Wyoming. In early 2019, Wyoming spent a series of blockchain laws which created a kind of regulatory framework for cryptographic ownership.
This legislation set the stage for Wyoming to grant Kraken and Avanti licenses to form “special purpose depository institutions” in the state in September and October 2020, respectively. The SDPI designation allows both institutions to take custody of clients’ digital assets, as well as convert between fiduciary and cryptographic and perform payment activities.
What they can’t do is use loans to take deposits from customers like, say, Bank of America, Wells Fargo or many local credit unions can do; instead, they need to maintain the customer’s reservations. No fractional reserve bank, then.
But didn’t the OCC guidance letter last week make all of this irrelevant? On a Letter of January 4, the firm concluded that national banks and credit unions could use blockchain and stablecoins technology for payment activities. He went so far as to say that banks could issue their own stablecoins, in the same way that they issued debit cards.
To the passive viewer, this may have made it appear that national cards were the way forward and that was the end of it. In fact, it may have only helped depositary institutions that already have access to the Fed’s payment system and many customers: the top of the hierarchy.
Big ones said Decrypt at a time when the letter “favors the largest incumbent banks over the smaller banks and other cryptographers”, since many of these banks would not need “prior approval from regulators” to use the technology.
Without access to the Fed’s payment system, Kraken and Avanti remain firm in the second tier – for now, although Long has confirmed Decrypt that its application process for accessing the Fed’s payment systems is underway.
When that happens, she tweeted: “THAT will be a [very] great deal! “