The Office of the Comptroller of the Currency (OCC) has issued new guidance confirming that national banks and federal savings associations can engage in crypto-asset custody and trading services. This clarification comes in Interpretive Letter 1184, which outlines that banks may buy and sell digital assets held in custody at their customers’ direction and may also outsource crypto-related activities, such as custody and execution services, to third parties. However, banks must ensure they implement proper third-party risk management practices.
This decision is important as the OCC’s guidance enables banks to participate more actively in the rapidly growing cryptocurrency market, which now includes over 50 million Americans. The OCC’s updated rules are part of its ongoing efforts to ensure that banks can responsibly engage in emerging financial technologies while protecting consumers and complying with applicable laws.
Rodney Hood, Acting Comptroller of the Currency, emphasized in the video that “this digitalization of financial services is not a trend. It is a transformation.” He further explained that regulated banks can provide custody services, including the safekeeping and secure storage of Bitcoin and other digital assets, on behalf of their customers. Additionally, “the banks we supervise also may buy and sell cryptocurrencies they hold in custody at their customer’s direction.”
The letter further states that banks can provide other important services, such as recordkeeping, tax reporting, and compliance services. The OCC also made it clear that banks may use sub-custodians to provide these services, but only “subject to appropriate third-party risk management practices.”
Rodney Hood also emphasized that “while a range of cryptocurrency and digital asset activities may be performed by banks and their third parties, I want to be clear that the OCC expects these activities to be conducted in a safe and sound manner and in compliance with applicable law.”
The clarification from the OCC is significant as it gives banks the ability to meet the growing demand for cryptocurrency-related services while ensuring they maintain security and comply with regulatory standards. In the video, Hood stressed that the digital shift is not just changing the way people engage with money but transforming the entire financial landscape.
For banks, this presents an opportunity to broaden their offerings by providing services related to digital assets in addition to traditional financial services. As Hood pointed out, regulated banks can now help customers manage their crypto portfolios just as they would traditional assets, with services like tax reporting and transaction recording.
However, banks must ensure they manage the risks involved in crypto custody. The OCC’s emphasis on “safe and sound” operations means that any crypto-related activity must be carried out securely and in full compliance with the law.
This updated guidance from the OCC marks an important step in integrating digital assets into the regulated financial system. With these clear rules in place, national banks are better positioned to serve customers while ensuring that crypto-related activities are conducted responsibly and securely.For more information, visit here.
