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Wintermute OTC Head: Banks Participating in Crypto Trading Essentially Operate as Brokers, Cannot Hold Positions or Engage in Proprietary Trading
Summary: In response to the interpretive letter issued by the Office of the Comptroller of the Currency (OCC) in the United States, clarifying that nationwide banks participating in riskless principal transactions involving crypto assets are engaged in lawful banking activities and can act as intermediaries in cryptocurrency trading, Wintermute OTC Head Jake stated on social media ...
In response to the interpretive letter issued by the Office of the Comptroller of the Currency (OCC) in the United States, clarifying that nationwide banks participating in riskless principal transactions involving crypto assets are engaged in lawful banking activities and can act as intermediaries in cryptocurrency trading, Wintermute OTC Head Jake stated on social media that the process of banks participating in crypto trading differs fundamentally from proprietary trading. He pointed out that banks typically acquire crypto assets from customers during transactions and immediately transfer the positions to liquidity providers (LPs). Technically, they only briefly hold ownership of the crypto assets to facilitate trade matching, without actually holding inventory or bearing price fluctuation risks. Economically, this model falls under brokerage business, allowing banks to match buyers and sellers, but not to hold positions or engage in proprietary trading.
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Link: Wintermute OTC Head: Banks Participating in Crypto Trading Essentially Operate as Brokers, Cannot Hold Positions or Engage in Proprietary Trading [Copy]
