The recent regulatory guidance from the US Office of the Comptroller of the Currency (OCC) allowing banks to act as validators for blockchain networks signifies a monumental shift towards institutional adoption of cryptocurrency. However, this move also raises significant concerns regarding centralization risks within decentralized networks, as articulated by Bohdan Opryshko, chief operating officer of staking service provider Everstake.
On March 7, the OCC relaxed previous restrictions on how banks can participate in the cryptocurrency sector, specifically permitting their involvement in independent node verification networks. This change opens the door for banks to engage with proof-of-stake (PoS) networks like Ethereum and Solana, potentially reshaping the landscape of digital asset validation.
While increased capital from banks could bolster these networks, Opryshko warns that this involvement could lead to the centralization of power among a few major players. “If banks become dominant validators, power could become concentrated, reducing the decentralized nature of PoS networks,” he noted. This situation poses a serious threat to the essence of decentralized finance, where power is ideally distributed among a diverse range of participants.
Moreover, the influx of institutional money into staking pools could have unintended consequences, such as suppressing staking yields for smaller validators. Opryshko pointed out that if large entities like banks start staking substantial amounts, it could precipitate a sharp decline in rewards for the remaining participants, disrupting the balance that currently exists.
As of March 12, data indicates that Ether stakers are earning approximately 5.5% APR, while Solana stakers are seeing returns close to 8%. However, this data may skew dramatically with the inclusion of banks in the staking marketplace, raising further questions about the sustainability of these returns.
Addressing the Debanking Crisis
This regulatory development comes on the heels of a broader movement initiated by US President Donald Trump, who has committed to expanding access to banking services for cryptocurrency firms. The OCC’s announcement follows a wave of criticism surrounding the practice of ‘debanking,’ which saw financial regulators allegedly pressuring banks to limit or cut off services to crypto companies.
In fact, a lawsuit spearheaded by Coinbase revealed that certain financial institutions were summoned to pause their engagement in crypto banking activities. President Trump’s executive order has called for agencies to prioritize fairness and open access to banking for digital asset firms, emphasizing a vision of the US as the world’s crypto capital.
So far, Anchorage Digital stands as the only federally chartered US bank currently offering cryptocurrency staking. As the landscape evolves, stakeholders must navigate the complex interplay of regulatory guidance, institutional involvement, and the principles of decentralization to ensure a balanced and equitable future for blockchain technology.
