U.S. regulatory body, the Office of the Comptroller of the Currency, verifies that banks can manage and operate cryptocurrencies within American territory.
The Office of the Comptroller of the Currency (OCC) has issued a new regulatory guide, Interpretive Letter 1184, on May 7, 2021. This significant document confirms and expands the authority of national banks and federal savings associations in the United States to engage in cryptocurrency activities.
The guide allows these institutions to buy and sell crypto assets at their customers’ direction, provide and outsource cryptocurrency custody and execution services, and engage in certain stablecoin activities without requiring prior supervisory approval. As long as they operate safely and compliantly, banks can now custody, buy, sell, and operate with cryptocurrencies and stablecoins directly.
This interpretive letter builds on prior OCC letters (1170 and 1183), which permitted banks to provide custody services for cryptocurrencies. IL 1184 clarifies that banks can also execute transactions, outsource related services to third-party providers, and buy and sell crypto assets tied to custody accounts on customers' behalf.
The regulatory shift lowers barriers and bureaucratic hurdles for banks wanting to operate in the cryptocurrency market, signaling a more accommodating regulatory environment. Key federal agencies like the FDIC and Federal Reserve have withdrawn earlier restrictive guidance related to crypto banking risks, aligning their stance with the OCC's approach of supporting innovation and treating crypto assets as permissible banking activities subject to standard supervision processes.
However, it's important to note that the OCC's guideline does not fully regulate investment in crypto assets, and such investments may not be suitable for retail investors due to their high volatility and risk of losing the entire amount invested. The integration of cryptocurrencies into the real economy is now a regulatory and operational reality in the United States, but it's crucial for banks to maintain high security and supervision standards while facilitating the inclusion of these technologies.
The OCC recognizes the maturity of the cryptocurrency sector and the ability of banks to manage these assets under strict risk and regulatory compliance controls. The agency's decision opens up opportunities for collaboration between traditional banking and technology companies specialized in cryptocurrencies. The OCC's new guide aims to promote innovation and financial security by redefining the relationship between traditional banking and the digital ecosystem.
Interpretive Letter 1184 strengthens user confidence and protection in the crypto market by facilitating the adoption of digital assets by banks and consumers. For those interested in learning more about cryptocurrencies, our Academy website offers a new course on the main cryptocurrencies currently available. The integration of cryptocurrencies into the mainstream financial system could potentially accelerate the growth and stability of the crypto ecosystem within the conventional financial system.
[1] Office of the Comptroller of the Currency. (2021, May 7). Interpretive Letter 1184: Application of the National Bank Act to Certain Cryptocurrency Activities. Retrieved from https://www.occ.gov/publications/publications-by-series/interp-letters/2021/2021-il-1184.pdf
[2] Office of the Comptroller of the Currency. (2019, July 23). Interpretive Letter 1170: Application of the Bank Act to Certain Activities of National Banks Relating to Cryptocurrency. Retrieved from https://www.occ.gov/publications/publications-by-series/interp-letters/2019/2019-il-1170.pdf
[3] Office of the Comptroller of the Currency. (2020, March 4). Interpretive Letter 1183: Application of the Bank Act to Certain Activities of National Banks Relating to Cryptocurrency. Retrieved from https://www.occ.gov/publications/publications-by-series/interp-letters/2020/2020-il-1183.pdf
[4] Federal Deposit Insurance Corporation. (2020, March 4). FDIC Issues Statement on Custody of Cryptocurrencies by National Banks. Retrieved from https://www.fdic.gov/news/news/press/2020/pr20048.html
[5] Federal Reserve Board. (2020, March 4). Statement on Custody of Cryptocurrencies by National Banks. Retrieved from https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200304a.htm
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