- OCC allows U.S. banks to provide cryptocurrency services without first obtaining regulatory approval.
- Banks can now trade, custody, and settle crypto assets directly or via third-party providers.
- Federal rules now permit crypto activities as standard banking functions under strict compliance.
National banks in the United States can now offer cryptocurrency services without obtaining prior approval, according to a new interpretive letter issued Wednesday by the Office of the Comptroller of the Currency (OCC). The updated guidance, signed by Acting Comptroller Rodney E. Hood, grants federal savings associations and national banks the authority to conduct crypto-related activities such as buying, selling, and custody of digital assets on behalf of clients. The directive also allows institutions to rely on third-party service providers, under bank supervision, to carry out these services.
It overturned an OCC rule from 2021 that had required banks to get a ‘letter of non-objection’ before they could get involved in crypto markets. It’s part of a larger shift in federal policy, with coordinated tinkering by many regulatory bodies, including the Federal Reserve. It also removes a significant procedural barrier in clearing a legal path for banks to move into the digital asset space.
Regulators Drop Approval Requirements for Crypto Activity
In addition to the OCC’s announcement, the Federal Reserve has ended its previous guidance that required American banks to notify the agency in advance of any planned activity involving crypto assets. Banks are also no longer obligated to obtain formal approval to engage in operations related to stablecoins.
Institutions are allowed by the OCC to provide a range of services around crypto assets, including trade execution, conversion between fiat and cryptocurrencies, clearing and settlement of transactions, valuation of assets, tax reporting, maintenance of transaction records, some combinations of the above and potentially others, the OCC said. Banks may perform these services internally or farm them out to external providers, as long as banks keep an eye on the activities and have the ability to control and manage risk.
As we laid out in our interpretive letter, cryptocurrency custody is simply a modern extension of the traditional suite of custodial services that were offered by banks for many, many years. Banks were allowed to use sub-custody banks to hold cryptocurrencies, provided that the main bank ensures that adequate internal controls are in place to protect the assets, the OCC said. The bank still has responsibility for protecting the customer’s assets.
Banks Gain Flexibility but Must Maintain Compliance Standards
The updated guidance offers banks increased operational flexibility but underscores the necessity for all cryptocurrency-related activities to be conducted in a safe and sound manner, while adhering to all relevant laws and agreements. When banks act in a fiduciary capacity, they must follow federal fiduciary standards as set forth in parts 9 or 150, depending on their charter type.
However, OCC said banks are still on the hook for the performance of third-party service providers. The bank can delegate some or all services to third-party vendors, but such delegation does not transfer regulatory obligations away from the bank. One would expect that all cryptocurrency-related functions would be covered by a robust risk management framework, internal controls, and compliance monitoring processes that institutions are expected to develop.
Outsourcing of lending or storing of digital assets, the OCC added, must also be subject to the same standards and oversight as if the bank did it itself. All activities shall take customer protection and soundness into great consideration.
This clarification resolves earlier uncertainty regarding whether banks could participate directly in the execution of crypto trades for clients, beyond merely holding digital assets in custody. While crypto custody was never explicitly prohibited, the authority to engage in buying and selling was unclear prior to this announcement.
The OCC’s new position follows several recent steps by U.S. regulators indicating a change in policy direction regarding digital assets. President Donald Trump recently appointed Paul Atkins as Chair of the Securities and Exchange Commission (SEC), replacing Gary Gensler. Since the leadership change, the SEC has dropped a number of high-profile lawsuits and investigations involving cryptocurrency firms.
The combined regulatory actions by the OCC, Federal Reserve, and SEC indicate a coordinated move to revise the federal government’s approach to oversight of the digital asset market. This latest OCC letter formally opens the door for regulated financial institutions to provide an expanded range of cryptocurrency services under a consistent legal and supervisory framework.
