In a surprising move, the U.S. banking regulator has given approval to banks to hold cryptocurrency, a decision that could shake up a market currently dominated by cryptocurrency-only firms and startups.

The decision from the U.S. Office of the Comptroller of the Currency, an independent bureau within the Department of the Treasuring tasked with overseeing the federal banking system, was detailed in a letter today to an unnamed bank.

The letter states that national banks may provide cryptocurrency services on behalf of customers including holding cryptographic keys associated with cryptocurrency, referring to custodial services. It goes on to note that national banks may provide permissible banking services to any lawful business they choose, including cryptocurrency businesses, as long as they effectively manage the risks and comply with applicable law.

In a separate statement, the OCC noted that providing cryptocurrency custody services is a modern form of traditional bank activities related to custody services.

“From safe-deposit boxes to virtual vaults, we must ensure banks can meet the financial services needs of their customers today,” Acting Comptroller of the Currency Brian P. Brooks said. “This opinion clarifies that banks can continue satisfying their customers’ needs for safeguarding their most valuable assets, which today for tens of millions of Americans includes cryptocurrency.”

Notably, Brooks is a former executive at Coinbase Inc. who joined the OCC earlier this year.

The announcement applies to all national banks and federal savings associations of all sizes, that is banks and savings associations that have a federal charter.

While specifically referencing custodial services, the decision potentially opens the door for banks to offer other cryptocurrency services as well such as crypto lending. As Jeff John Roberts at Fortune noted, the question now is whether banks will build their own cryptocurrency divisions or acquire existing cryptocurrency startups.

Competition is always healthy and despite the announcement potentially threatening the viability of smaller cryptocurrency firms in the future, some in the industry, such as Barry Silbert, founder and chief executive officer of the Digital Currency Group, welcomed the move.

I'm looking forward to getting my ass kissed by all the banks now

— Barry Silbert (@barrysilbert) July 22, 2020

The decision opens the door to banks but still has some limitations. The OCC added that banks entering the market “should develop and implement those activities consistent with sound risk management practices and align them with the bank’s overall business plans and strategies.” Not every bank will be rushing out to provide cryptocurrency services, but it’s likely some will, since offering cryptocurrency custodial services is a potentially lucrative new income stream.

Image: OCC/Wikimedia Commons