Visa invites crypto aboard as US banks given green light to hold keys
Is the United States making up for lost digital currency time?
On 22 July the US Office of the Comptroller of the Currency (OCC) gave national and state banks and thrifts the green light to hold custody of cryptocurrency for customers.
"The OCC concludes that providing cryptocurrency custody services, including holding unique cryptographic keys associated with cryptocurrency, is a modern form of traditional bank activities related to custody services," it decided.
On the same day Visa published a blog post titled "Advancing our approach to digital currency" in which it outlined some of its existing partnerships in the cryptocurrency industry and its current initiatives in the space.
"The concept of digital currency — or a digital version of cash controlled by a private key — was created more than a decade ago, with the launch of Bitcoin," Visa inaccurately said. "Today, fiat-backed digital currencies, commonly referred to as 'stablecoins', have emerged as a promising new payment innovation, combining the benefits of digital currencies with the stability of existing currencies like the US dollar. It’s a concept that is gaining traction beyond fintechs, and now includes financial institutions and central banks. Consumers and businesses are also adopting digital currencies and circulation is growing rapidly, reaching over $10B in May."
"Visa has been working closely with licensed and regulated digital currency platforms like Coinbase and Fold to provide a bridge between digital currencies and our existing global network of 61 million merchants."
Visa may be angling for an edge though, and aiming for new rails of its own. Its acquisition of Plaid in January this year adds another element to the mix.
"Plaid will enable Visa to deepen engagement with non-bank financial services, develop new products, reinforce existing tokenisation efforts, and push an international approach to alternative rails and open banking," Commerce Ventures suggested at the time.
Plaid is a system for safely connecting people's bank accounts to apps, and its acquisition gives Visa a prominent position in the middle of P2P payments. Meanwhile, Visa's B2B Connect, its B2B cross-border payment offering, also saw it step into the middle of B2B payments.
With banks being given the cryptocurrency custody green light and Visa publicly renewing its cryptocurrency vows on the same day, (all so shortly after the news that PayPal is reportedly set to unleash its own crypto offering), there's a clear sense that the US is making up for lost time in the digital currency race by letting the private sector go to town.
As former CFTC head Christopher Giancarlo previously suggested, the technical groundwork for CBDC is all there. All that's left to do is decide what it will look like and then do it. But until then, perhaps private USD stablecoins present the best bet for a country that's been lagging in the race to CBDC?
Disclosure: The author holds BTC, ETH, BNB, KDA, BAND, CELO at the time of writing.