Federal banks, according to the OCC, are geared up for dominating the digital asset sector
In a significant move, the Office of the Comptroller of the Currency (OCC) has issued Interpretive Letter 1184, clearing the path for national banks and federal savings associations to engage in various activities related to the crypto market. This regulatory opening could lead to a more inclusive, innovative, and resilient financial ecosystem.
The interpretive letter provides legal clarity for banks participating in the growing digital ecosystem, eliminating years of uncertainty. Banks can now offer crypto-asset custody, trading, stablecoin management, and blockchain node operation without needing prior approval.
Key regulators like the SEC, CFTC, Fed, and FDIC need to update their regulations to keep up with this change, and coordination between these entities is vital to establish a solid regulatory framework.
The new framework allows banks to offer crypto-asset safekeeping services, either as fiduciaries or non-fiduciaries. Fiduciary services are subject to applicable federal and state laws, while non-fiduciary safekeeping is guided by bank-client contracts and the OCC’s Custody Services handbook.
Before offering crypto services, banks are expected to conduct effective risk assessments, considering technology, operational, compliance, cybersecurity, legal, and market volatility risks. Regulators emphasize the importance of strong control environments and sufficient technical expertise in banking organizations to manage the elevated risks of crypto-asset custody.
The FDIC and Federal Reserve have withdrawn earlier more cautious guidance, and no longer require prior approval for permissible crypto activities by supervised banks. Instead, oversight of crypto activities is now incorporated into the standard supervisory process to support innovation.
The GENIUS Act of July 2025 further supports this evolving framework by codifying the use of stablecoins in the U.S. economy, which intersects with the banking activities permitted under OCC letters.
Acting Comptroller of the Currency, Rodney Hood, has stated that "The digitalization of financial services is not a trend, it's a transformation." The OCC's stance allows national banks and federal savings associations to offer services linked to cryptocurrencies, including crypto-asset custody, buying and selling cryptocurrencies on behalf of clients.
The institutional legitimization of cryptocurrencies within the traditional banking system may contribute to greater stability and maturity of the digital market. The OCC's interpretive letter also allows banks to outsource crypto-related activities to qualified external providers, expanding possibilities for collaboration between traditional banking and crypto companies.
However, it's important to note that investing in cryptoassets carries risks. They are not fully regulated and may not be suitable for retail investors due to their high volatility, with a risk of losing all the amounts invested. The banking industry must continue to strengthen its internal capabilities to manage digital assets and their risks, including cybersecurity, illicit activity prevention, and managing the inherent volatility of cryptocurrencies.
With around 50 million people in the United States owning cryptocurrencies, representing thousands of billions of dollars in commercial and financial activity, the federal banking system is well-positioned to participate in digital asset activities. The OCC's interpretive letter defines a new era in crypto-asset regulation in the United States.
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