Can crypto trust firms compete with banks in US derivatives settlements?
Crypto custodians are moving into a market handling billions in daily settlements, but regulatory relief and a shift in congressional control leave questions over their long-term role.
Crypto custodians are expanding into the derivatives settlement market, which handles billions of dollars in daily transactions, as regulatory changes and shifting congressional control create uncertainty about their long-term role. The Commodity Futures Trading Commission (CFTC) recently granted derivatives clearinghouses permission to use trust companies for daily settlements if they meet the same evaluation and monitoring standards as traditional settlement banks.
This decision, made on November 5, aims to fill a regulatory gap created by the discrepancy between federal commodities law and CFTC Regulation 39.14, which currently only recognizes banks as settlement institutions. Several major crypto firms, including Coinbase, BitGo, Circle, Ripple, Crypto.com, and Bridge, have secured national trust bank charters from the Office of the Comptroller of the Currency (OCC) to facilitate their financial services expansion.
While the CFTC's no-action letter does not guarantee trust companies' long-term stability in derivatives settlements due to potential leadership changes and the need for formal regulation amendments, crypto firms have welcomed the expanded options.
Written by urgent.news from Cointelegraph's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
