U.S. OCC Clarifies That Banks Can Facilitate Crypto Trading and Safekeeping Through External Services
In a groundbreaking move, the U.S. Office of the Comptroller of the Currency (OCC) has given the green light for banks to dive into the cryptocurrency world. Banks can now offer custody and execution services for digital assets, allowing customers to buy, sell, and store their cryptocurrencies safely.
On May 7, 2025, the OCC released Interpretive Letter #1184, making it clear that banks can act on customer directions to trade cryptocurrencies, just like they would with conventional assets. This move opens the gates for banks to expand their offerings in the digital asset sphere, either through in-house resources or approved third-party providers.
What does this mean for banks and their customers? They can now safely store and manage digital assets without relying on standalone cryptocurrency platforms. Furthermore, banks can act as the middlemen for fiat-to-crypto and crypto-to-fiat conversions, providing a seamless experience for their clients interested in this new frontier.
The OCC's announcement clarifies that U.S. banks can delegate execution and custody tasks to third-party sub-custodians, as long as they maintain oversight and ensure that these third parties have robust internal controls in place. However, banks must follow established risk management practices and continue to comply with existing regulations under parts 9 or 150 of Title 12 of the Code of Federal Regulations when acting in a fiduciary capacity.
With this regulatory backing, banks can now offer a host of additional cryptocurrency-related services, including trade execution, tax reporting, and recordkeeping. These services are seen as an extension of a bank's traditional custodial role, tailored to meet the evolving needs of the digital finance landscape. The decision aligns with a broader legal perspective that recognizes the need for banking practices to adapt to technological advancements.
The OCC's guidelines signal a clearer framework for traditional banks to navigate the cryptocurrency economy safely. It may also reduce the reliance of U.S. customers on specialized cryptocurrency platforms by integrating digital asset services into mainstream institutions. Banks will need to ensure that all crypto-related activities are conducted in a safe and sound manner, in strict adherence to customer agreements and applicable laws, and that trading and custody operations are executed at the customers’ direction, reflecting a non-speculative, service-based model.
With the OCC's new guidance in place, we're likely to see an influx of banks jumping into the crypto market, integrating crypto custody services into their core offerings, partnering with established crypto custodians and infrastructure providers, and exploring revenue opportunities through regulated digital asset services. It's a brave new world for banks and their customers, and the crypto landscape is destined for a major shake-up. However, with great opportunity comes great responsibility: banks must implement robust risk controls and operational due diligence, particularly when dealing with volatile crypto markets and outsourced service layers. After all, the game has only just begun.
Sources:
- "OCC Reaffirms Banks' Authority to Provide Cryptocurrency Services." CoinDesk, 7 May 2025, https://www.coindesk.com/occ-banks-authority-cryptocurrency-services
- "OCC Issues Letter to Banks on Cryptocurrency Services." American Banker, 7 May 2025, https://www.americanbanker.com/news/occ-issues-letter-to-banks-on-cryptocurrency-services
- "OCC Clarifies Crypto Custody and Execution Rules for Banks." The Block, 7 May 2025, https://www.theblockcrypto.com/ Analysis/298913/occ-clarifies-crypto-custody-and-execution-rules-for-banks
- "Bank Custody of Virtual Currency." OCC.gov, 7 May 2025, https://www.occ.gov/publications/ Bulletin/2025/ْ25-21.pdf
- "Cryptocurrencies, Risk Management, and Compliance for Banks." cambridgeford.com, 7 May 2025, https://cambridgeford.com/cryptocurrencies-risk-management-compliance-banks/
Banks can now leverage their existing resources in finance, business, and technology to provide an array of cryptocurrency-related services, such as trade execution, tax reporting, and recordkeeping. This move is expected to attract more banks to invest in the crypto market, leading to a potential shake-up in the current cryptocurrency landscape. Furthermore, banks will have to implement robust risk controls and adhere strictly to customer agreements and applicable laws, as they expand into the digital asset sphere.
