Wintermute OTC Head: Banks’ Participation in Crypto Trading Is Essentially a Brokerage Model, They Cannot Hold Positions or Conduct Proprietary Trading

According to Odaily, in response to the interpretive letter issued by the US Office of the Comptroller of the Currency (OCC), which clarifies that it is a legitimate banking activity for national banks to participate in riskless principal transactions involving crypto assets and to act as intermediaries in cryptocurrency transactions, Jake, head of Wintermute OTC, stated on social media that the process of banks participating in crypto trading is fundamentally different from proprietary trading. He pointed out that in such transactions, banks typically purchase crypto assets from clients and immediately transfer the position to a liquidity provider (LP). On a technical level, banks only hold ownership of the crypto assets for a very brief period to complete the transaction matching, but do not actually hold inventory or bear price fluctuation risks. From an economic substance perspective, this model constitutes brokerage business: banks can facilitate transactions between buyers and sellers, but cannot hold positions or engage in proprietary trading.