Bitcoin (BTC) price has risen 5% in the last 24 hours and is currently trading at $ 9,600 after reaching a daily high of $ 9,664. The overnight rise in BTC coincides with an unexpected decision by the Office of the Comptroller of the Currency (OCC).
On July 22, the OCC said that banks in the US can hold cryptocurrencies. Basically, it gave the green light to the bank’s crypto custody services.
A day after the announcement, the cryptocurrency market increased. Along with BTC, Ether (ETH) also experienced a substantial recovery as the price rose 12%.
BTC USDT daily chart. Source: TradingView
Is the Bitcoin price reacting to the OCC decision?
In a formal statement, OCC Acting Comptroller Brian Brooks said banks could serve “tens of millions of Americans” by supporting the safekeeping of cryptocurrencies.
Brooks said:
“From safe deposit boxes to virtual vaults, we must ensure that banks can meet the financial service needs of their customers today. This opinion clarifies that banks can continue to meet the needs of their customers to safeguard their most valuable assets, which today for tens of millions of Americans includes cryptocurrencies. “
Indeed, this has opened the floodgates for banks to enter the cryptocurrency market and provide their clients with tools to invest in cryptocurrencies.
Throughout 2020, a steady increase in institutional inflows in Bitcoin has continued to push the cryptocurrency market upward.
In the second quarter of this year, Grayscale said it processed a $ 905.8 million inflow to its cryptocurrency products. The firm, which operates the Grayscale Bitcoin Trust, recorded a total revenue of $ 1.4 billion during Q1-Q2.
Bank-managed crypto custody solutions could be an alternative to existing regulated Bitcoin investment vehicles. Investors may be interpreting this new development as optimistic, as it means that more reputable and institutional investors could potentially invest in the cryptocurrency market in the long term.
Peter Van Valkenburgh, director of research for the non-profit organization CoinCenter, said:
“Accepting that centralized entities for the safekeeping and storage of cryptocurrencies are inevitable and essential, so it is excellent news that, thanks to new OCC policies, there will be even more competition to provide those services. National banks entering the game expand that competition and can also allow more traditional institutional investors to trade in cryptocurrencies. ”
It is possible that the unexpected OCC announcement has caused a sharp increase in demand for major cryptocurrencies.
Industry executives react positively, but with some skepticism.
The general response to the OCC statement was positive. Industry executives across the board said it could generate more cryptocurrency market entry in the medium term.
But, Compound Labs attorney Jake Chervinsky emphasized that the OCC is one of many regulators in the United States. It is also unclear whether Brooks will continue to be the acting Controller for a long period.
Since banks move based on market demand, Chervinsky suggested that he does not guarantee an increase in banks supporting crypto custody. He said:
“Banks are ultimately businesses like any other, so they will respond to customer demand. But OCC is just one of many relevant regulators, Brian Brooks may not be in charge there for much longer, and banks are psychologically risk-averse / compliance-focused. ”
As such, it remains to be seen whether investors are simply using the news as a narrative to drive the market.
