US banks as blockchain validators raise centralisation concerns

The recent regulatory guidance by the US Office of the Comptroller of the Currency (OCC) permitting banks to act as validators in proof-of-stake (PoS) blockchain networks has sparked debates about its implications for decentralisation.

This development, announced on March 7, marks a significant step toward institutional adoption of blockchain technology but has raised concerns about the risks of centralisation.

Bohdan Opryshko, COO of Everstake, a staking service provider, highlighted the dual impact of this move.

While increased institutional participation could bring financial stability to PoS networks like Ethereum (CRYPTO:ETH) and Solana (CRYPTO:SOL), it risks concentrating power among dominant validators.

"If banks become dominant validators, power could become concentrated, reducing the decentralised nature of PoS networks," Opryshko explained in an interview on March 12.

Another potential consequence is the suppression of staking yields due to large-scale stakes by institutional players.

Opryshko warned that this could undermine smaller validators and reduce rewards for other participants.

As of March 12, staking yields for Ether stood at approximately 5.5% APR, while Solana offered close to 8%, according to Staking Rewards data.

Staking involves securing blockchain networks by posting cryptocurrency as collateral with validators in exchange for rewards.

The OCC’s decision follows a broader push to ease restrictions on crypto banking activities, including President Donald Trump’s January 23 executive order emphasising fair access to banking services for digital asset firms.

The announcement also comes in the wake of heightened scrutiny over "debanking," where crypto firms faced restricted access to banking services.

A lawsuit led by Coinbase in June 2024 revealed letters from regulators urging financial institutions to pause crypto-related banking activities.

Currently, Anchorage Digital remains the only federally chartered US bank offering cryptocurrency staking services.

While the OCC’s updated stance opens doors for more banks to enter this space, experts caution that balancing institutional involvement with decentralisation will be critical for maintaining the integrity of PoS networks.