Can I Sign Arkansas Banking Permission Slip

Can i industry sign banking arkansas permission slip

the office of the comptroller of the currency uh is now run by brian brooks who was the former chief league officer at coinbase as you know uh yeah and within the first 60 days of him being on the job he issues the clarification that came out um this past week and essentially what he said is hey if you are a bank you should be able to custody uh the value of assets or valuable assets for your customers that includes everything from safety deposit boxes to virtual vaults this kind of language they used and that includes crypto currencies being part of those valuable assets of your of your clients and so really issuing kind of a clarification walk us through kind of your understanding of like what does this mean and what are the ramifications it's a big deal and it's a bigger deal than uh than most folks in the crypto industry understand uh and uh you know look the occ copied wyoming um his first pronouncement was looking at a special type of payment charter i knew that wasn't going to go anywhere because he would really have needed congressional authorization for that he can't just change an interpretation of an existing law uh and so i figured all right that's if that's if that's what we're up against you know that's uh that's not gonna change anything but this announcement yesterday or two days ago now absolutely changes everything um because as of two days ago national banks can custody digital assets and it's just it is what it is they don't need to go through a special process unless this is a material part of their business the way the banking regulation works is if it is a material part of your business then you really have to go through a a procedure with your regulator where they review what your business plan is and the impact on the bank from a safety and soundness perspective but if it's one of the behemoths literally they can be in the business tomorrow because it's not going to be material it's not it's not going to have a big impact on the bank from a safety and soundness perspective so um yeah we uh we've got ears to the ground we've got a lot of people multiple people who are inside the circle uh i did not know this was coming most people didn't they kept it a a big secret but it's here and it's it's a much bigger deal than folks realize um in part because of some pieces that that haven't fallen into place yet uh but uh you know um every u.s bank is now able to custody crypto and when i say every some are probably thinking wait a minute what about the state banks only a relatively small fraction of the number of banks in this country are regulated by the occ or the occ regulates national banks and then there are 50 state regulators that regulate state banks at the end of the day they're not different and there's maybe a perception that a national bank has a has a an advantage just because it's national but here's here's the difference state banks have the exact same master account at the federal reserve that a national bank has they can do the same things and that state member banks by law can do everything that a national bank can do so this is why i say every bank in the country now can uh can can custody digital assets as a result of that interpretive letter uh the interesting question is who put that interpretive letter in that would have had to have been one of the national banks and uh my first reaction was i was assuming it was goldman sachs goldman sachs is a state bank they're not a national bank so i went uh i went i poured through the list of national banks and by the way we've gotten a couple calls from national banks uh as well because everybody has just you know the not everybody realizes yet how meaningful this is because i've seen some uh some comments from from some of the native crypto companies uh that indicate to me they don't understand what really happened yet uh but they will they'll figure it out um the entire landscape in the u.s just shifted and uh now you need a bank license in order to be competitive that that's that's the bottom line i'll also point to fidelity digital put out a tweet yesterday that indicates they get what's going on uh and i'll paraphrase it they said you know congratulations to the national banks for for coming into this industry uh we'd be happy to be your sub custodian that tells you that tells you what they know they they know what's going on and uh for fidelity to be a sub custodian to a national bank it's one of the big ones so there's kind of two components here right so a national bank basically asked and said can you clarify for us what their current rules are uh the occ has clarified and said yes you may custody uh cryptocurrency there's the implications on the legacy uh kind of financial organizations and there's an impact on the crypto companies let's start with the crypto companies because i think that's kind of more cut and dry you previously said that now it's going to require a bank license for people to be competitive on the custody side uh kind of elaborate on that a little bit and explain it well custody and prime brokerage uh and maybe even exchange um you know again it's so sort of funny i figured out a couple years ago when i was in wyoming working you know spitballing on what what should a state do to grab a competitive advantage we figured out that you needed to have a bank license in order to have a competitive advantage here um and and and the basic simple observation is crypto settles very quickly dollars settle very slowly it's not it's not complicated uh and if you're trying to do crypto to fiat um you've got some settlement problems which which which injects something called hair shot risk which is airshot was a big german bank that um that failed in the financial in the foreign exchange market and triggered a cascade of of losses among a lot of a lot of banks um and really what it is is basically you just got settlement risk if you don't have it's it's like you know trading a baseball card right both both people hold on to the baseball card and then they let go at the same time that's uh that's uh uh you know you're again kids kids tend to have the uh the better understanding of the way the world should work right and the adults screwed it up and set up these um very different settlement cycles for uh for for for for dollars um and then there are a lot of wrinkles inside of it too uh fed wires can be reversed most folks don't know that you don't have settlement finality with fed wire and then ach is a very big deal um because you ach transactions for consumers they can reverse an ach transaction for 60 days beyond the settlement beyond the statement period and if you're at the beginning of your statement cycle that means your ach transaction isn't actually settled for 90 days so this is the reason why the crypto companies have uh you know if you put if you if you ach uh a dollar payment into one of the crypto exchanges they typically don't give you access to it right away they they want to know if you're going to try to take it back um and there's a lot of ach fraud you know we i think most folks are aware of the chargeback risk and credit cards but there's chargeback risk in dollar payments too so those are a lot of the real world problems and when we started working on some of our products we we spent a lot of time talking to institutional traders but also just users of of the payment system you know keep in mind i came from the corporate world corporate treasury world um working with corporate treasurers when i was on wall street and uh they live this pain every day um there's a there are a lot of problems with the fact that the us dollar payments are delayed so i i figured out pretty early on and and i haven't even talked about the securities piece you know what does it take to be a qualified custodian a trust company doesn't cut it uh because of the way the laws are written you've got to be a bank and a bank in one part of the custody rule says you you can be a trust company but in a part of the custody rule that really matters it says you've got it does not include a trust company and the definition of bank means takes deposits and makes loans um so you um or you've got to be a a state chartered bank which is what avanti is um but you've got to you've got to fit into those categories in order to be a true qualified custodian and um and trust companies uh unless they do fiduciary business which the there's only one trust company in that the custody's crypto that i know of that does fiduciary business fiduciary business means you're exercising discretion over company assets you're taking fiduciary responsibility for those assets that is not what trip what typical cryptocustody is so this is a long convoluted answer to say the trust company licenses are now obsolete if a bank can custody crypto particularly if it's one of the big guys uh all the native crypto companies now need to get bank licenses and you know it's funny i was screaming this from the mountaintop long before i started avanti get a bank license right president trump told libra get a bank license it's not like folks weren't warned um get a bank license well it's here now everybody's gonna have to get a bank license and it takes nine to twelve months to get a bank license i i don't like the fact that it does but it does it's an unbelievably difficult process which is why probably a lot of folks looked at it in wyoming and didn't get it started uh and i'm very glad i did because you know now i think avanti's in the pole position we're in a really interesting position relative to the shift that just occurred in the industry