In the US, the relationship between banks and crypto is quite complicated because the government has not formally accepted crypto as a currency or a means of payment. Because of that, crypto enthusiasts could not bank their digital assets correctly, which left these assets vulnerable in an attack. All this was until the Office of the Comptroller of the Currency (OCC) changed all that. The OCC’s green light presented small and nimble banks an opportunity to innovate and step into the gap and provide services the more prominent brands cannot quickly fulfill.
On the 21st of December, FV (fintech ventures) Bank announced to the world that it had been permitted to provide custody services for BTC (Bitcoin), ETH (Ether), EOS, XRP (Ripple), and other ERC-20 tokens by the Puerto Rico Office of the Commissioner of Financial Institutions (OCIF). According to the statement, the Bank will also be processing altcoins and convert them into fiat upon a client’s request. According to a source inside the Bank, its objective is to go live in the first quarter of 2021 so that the Bank does as well as possible.
This announcement comes in the backdrop of other banks such as BBVA, DBS, and Standard Chartered, who have also announced that they will also be providing digital asset services. Almost as if it was meant to be, the most valuable altcoin prices are still soaring, meaning you might want somewhere safe to keep your valuables. Initially, the company was created to help fintech companies get access to US banking services. When the OCC rendered their opinion back in July, they saw an opportunity to pivot and did it. According to FV Bank CEO Miles Paschini, their goal is to help every person or institution keep their digital assets safe. Also, provide a seamless banking experience as concerned to the asset class.
How FV Bank Does It
You might be wondering why a bank in Puerto Rico would be of concern to people living in the US. Legally, Puerto Rico is a commonwealth of the US and, as such, has its own independent financial regulatory body called the OCIF. Be that as it may, Puerto Rico bases its insurance and banking laws on US legal statutes like the Bank Secrecy Act (BSA). Since the island is part of the US’s banking system, FV Bank is allowed to have a master account at the government’s Federal Reserve in New York.
Since FV bank is relatively new to this, it has partnered with a company with the necessary infrastructure to securely keep digital assets in a way that’s safe but also smooth to withdraw should the need arise. The Bank said it would be engaging several big over-the-counter crypto exchanges. This to keep everything flowing smoothly to boost their liquidity.
Upon hearing the good news from the OCC in July, the Bank went to the OCIF to request permission and clarification about whether it could offer custodial services for people and businesses. Unlike fiat currency, where the Bank takes the physical money, we are only dealing with the digital aspect. Since these funds are only located on a distributed ledger or blockchain, there is no physical possession of the said asset. Therefore, depositing cryptocurrency to a bank means handing over your cryptographic access keys to the specific cryptocurrency. While one is virtual and the other physical, they are both incredibly valuable. They should attract the best possible care, especially given that the clients will have to pay a fee for every successful transaction.