As reported by ChainCatcher, Wintermute OTC head Jake commented on the U.S. Office of the Comptroller of the Currency's (OCC) recent interpretive letter, which clarified that national banks can legally engage in crypto transactions as intermediaries. Jake explained that banks in crypto trading differ fundamentally from proprietary trading. He noted that banks typically purchase crypto assets from clients and immediately transfer the positions to liquidity providers (LPs), holding ownership for only a short time to facilitate trade matching. Banks do not hold inventory or bear price risk, and economically, this model functions as a brokerage service, where banks can match buyers and sellers but cannot hold positions or engage in proprietary trading.
Wintermute OTC Chief: Banks in Crypto Trading Operate as Brokers, Cannot Hold Positions or Trade for Profit
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Summary
Wintermute OTC head Jake pointed out that banks in the crypto space operate as brokers, not traders. The recent OCC guidance clarifies that national banks can facilitate crypto trades but cannot hold positions or trade for profit. Jake explained that banks buy assets from clients and pass them quickly to liquidity providers, avoiding price risk. This model aligns more with TA for crypto strategies, where execution matters over holding. He added that banks lack the ability to engage in value investing in crypto, since they cannot take long-term positions. The setup ensures they act purely as intermediaries in the transaction process.
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