BitGo Issues Public Letter to OCC Request for Comment: Letter Outlines Best Practices for Banks to Secure Digital Assets
August 06 2020 - 5:42PM
Business Wire
BitGo Welcomes OCC’s Embrace of Digital Assets,
Permitting Banks to Custody and Provide Banking Services to their
Crypto-Oriented Customers
BitGo, the leader in digital asset financial services, published
a public letter to the Office of the Comptroller of the Currency
(OCC), a branch of the Treasury that supervises national banks and
thrift institutions.
BitGo issued the letter in response to the OCC’s recent call for
input on how best to accommodate new technology and innovation in
the business of banking and its support that a national bank may
provide “cryptocurrency custody services on behalf of customers,
including by holding the unique cryptographic keys associated with
cryptocurrency.”
In the letter, BitGo outlines best practices for the complex and
highly-specialized endeavor to custody cryptocurrencies and other
digital assets. Below is a short excerpt and a full copy of the
letter may be found here.
Excerpt from BitGo’s Open Letter to
OCC:
On June 4, 2020 the Office of the Comptroller of the Currency
(“OCC”) issued an Advance Notice of Proposed Rulemaking (“ANPR”)
seeking input on how best to accommodate new technology and
innovation in the business of banking. Additionally, the OCC
recently released a statement reaffirming the OCC’s position that
“a national bank may provide these cryptocurrency custody services
on behalf of customers, including by holding the unique
cryptographic keys associated with cryptocurrency.” We are greatly
excited by these developments, which we view as a watershed moment
for both the U.S. financial system and the blockchain industry.
BitGo Holdings, Inc. (together with its respective subsidiaries,
are collectively referred to herein as “BitGo”) has been a leader
at the forefront of the fusion of these two worlds, which has
afforded us with a unique perspective. We believe this is our
moment to exercise our voice and answer the call to share our
experience with the OCC.
The custody of cryptocurrencies and other digital assets
(collectively, “cryptocurrencies”) is, by all measures, a complex
and highly-specialized endeavor. Cryptocurrencies are
simultaneously intangible digital assets that share qualities of
bearer instruments. At its most fundamental level, custody of
cryptocurrencies revolves around securing a private cryptographic
key required to sign transactions. In recognition of the inherent
difficulties in the custody of cryptocurrencies, we believe that
most, if not all, national banks should consider the following
option from the OCC’s recent Interpretative Letter: “A bank acting
as custodian may engage a sub-custodian for cryptocurrency it holds
on behalf of customers and should develop processes to ensure that
the sub-custodian’s operations have proper internal controls to
protect the customer’s cryptocurrency.”
As one of the first custodians of cryptocurrencies, we would
like to provide our insight so that the OCC may be able to issue
further guidance to national banks on criteria for selecting such a
sub-custodian for cryptocurrency. Specifically, we believe than any
proper sub-custodian must satisfy all of the following six criteria
– each of which work in conjunction with one another to produce a
gold standard of protection of customer’s cryptocurrencies:
- Existing Regulatory Oversight and Established Framework for
Compliance
- Multi-Signature Cryptographic Technology
- Offline “Cold” Storage of Cryptographic Keys
- Independently Verified System Controls
- Depth and Breadth of Cryptocurrency Experience
- Insurance Policy Covering Third-Party Hacks
About BitGo
BitGo is the leader in digital asset financial services,
providing institutional investors with liquidity, custody, and
security solutions. In 2020, the company launched BitGo Prime, the
first and only integrated solution with lending, trading and
qualified custody, as well as BitGo Portfolio and Tax solutions.
BitGo Trust Company, the first qualified custodian purpose-built
for storing digital assets, was launched in 2018. BitGo processes
over 20% of all global Bitcoin transactions, and supports over 250
coins and tokens. BitGo’s customer base includes the world's
largest cryptocurrency exchanges and spans more than 50 countries.
BitGo is backed by Goldman Sachs, Craft Ventures, Digital Currency
Group, DRW, Galaxy Digital Ventures, Redpoint Ventures, and Valor
Equity Partners.
Custody services are currently offered through BitGo Trust
Company, a South Dakota chartered trust company. BitGo is not
registered with the SEC, and does not offer legal, tax, investment,
or other advice. Please consult your legal/tax/investment
professional for questions about your specific circumstances.
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Michelle Marin michelle@bitgo.com