Wintermute OTC Head: The nature of banks participating in cryptocurrency trading is a brokerage model, and they cannot hold positions or engage in proprietary trading

Regarding the interpretive letter issued by the Office of the Comptroller of the Currency (OCC), which clarifies that national banks' participation in risk-free principal transactions involving crypto assets is a legitimate banking activity and can serve as intermediaries in cryptocurrency transactions, Jake, the head of Wintermute OTC, stated on social media that the process for banks participating in crypto trading is fundamentally different from proprietary trading.

He pointed out that banks typically purchase crypto assets from clients during transactions and immediately transfer the positions to liquidity providers (LPs). Technically, they only hold ownership of the crypto assets for a very short period to facilitate the transaction matching, but do not actually hold inventory and do not bear the risk of price fluctuations. From an economic substance perspective, this model falls under brokerage services, where banks can facilitate transactions between buyers and sellers but cannot hold positions or engage in proprietary trading.