OCC clears banks to offer crypto services without prior approval

The US Office of the Comptroller of the Currency (OCC) has officially confirmed that the national US banks it oversees can offer cryptocurrency custody and execution services to their customers. 

According to an interpretive letter issued Wednesday by Acting Comptroller of the Currency Rodney E. Hood, national banks and federal savings associations are now authorized to buy and sell crypto assets as directed by their clients. Additionally, they can outsource these services to third-party providers. 

OCC greenlights crypto custody and trading services, reversing 2021 restrictions

The OCC’s decision for US banks to offer crypto custody and trading services without prior approval comes after coordinated action across regulatory agencies, signaling a broader recalibration of the Trump administration’s approach to digital assets.

The affirmation reverses the OCC’s 2021 directive issued in March requiring banks to obtain a “letter of non-objection” before participating in crypto markets. The new guidance represents a key milestone in the U.S. financial sector’s integration with the growing digital asset economy.

The letter in March stated that national banks offering custody for cryptocurrency may also handle other related activities. These services include cryptocurrency to fiat exchanges, transaction clearing and settlement, trade execution, record-keeping, as well as provision of asset valuation and tax services, report production, and other relevant support functions.

It also explained that a bank acting as a custodian could use a sub-custodian to hold cryptocurrencies on behalf of the bank’s customers as long as the bank has “robust processes” in place to ensure that its sub-custodian has adequate internal controls to protect those assets.

Meanwhile, the Federal Reserve recently dropped its supervisory guidelines that previously required American banks to notify it in advance of any crypto-asset activities. Banks are also no longer required to obtain formal approval from the Fed before engaging in stablecoin-related operations.

OCC expands crypto guidelines, emphasizes risk controls and fiduciary duties

In a recent update, the OCC expanded this guidance to offer various ancillary services like settlement of assets, executing trades for their clients, keeping records, and valuing assets and tax services. But, such services would have to obey the laws and agreements for customers.

The OCC also restated its prior advice, which holds that crypto custody constitutes the contemporary version of traditional bank custody offerings.

Banks can work with sub-custodians to lend and store crypto assets but must implement strict risk management for such activities.

Third-party providers handling crypto assets on behalf of banks must maintain strong controls to safeguard customer assets. Banks must implement robust controls to ensure the safety of customer funds. All outsourced services are under the banks’ control.

When banks act in a fiduciary role, they must adhere to federal fiduciary rules outlined in parts 9 or 150, depending on their charter. All crypto-related activities, whether conducted directly or through third-party providers, must be carried out safely, soundly, and in compliance with the law.

OCC clarifies the legal path for banks to expand crypto services and trading

The OCC’s recent announcement gives banks a clear legal foundation for offering digital asset services in a regulated environment.

It was previously unclear whether banks could buy and sell crypto assets held in custody on behalf of customers. Custody services were not prohibited, but executing trades was a gray area.

This clarification will likely improve confidence in crypto services offered by regulated financial firms and enable banks to respond to a cryptocurrency demand surge without building in-house solutions.

Banks now have an established way to grow into new financial cryptocurrency offerings as long as they can manage their partners and risk in the process.

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