Banks Get More Freedom to Dabble in Crypto with Regulator Approval
Crypto assets can now be purchased, sold, and safeguarded by banks under the jurisdiction of the Office of the Comptroller of the Currency.
Missed the crypto boat? Fear not, traditional banks! The Office of the Comptroller of the Currency (OCC) has decided to loosen its legislative reins, granting banking institutions the green light to delve into the world of cryptocurrency. Acting Comptroller, Rodney Hood, declared that crypto is no longer just a passing trend but a full-blown "transformation," necessitating increased flexibility and adaptation within the banking industry.
Hood let loose in a video statement, asserting that national banks and federal saving associations may now participate in various cryptocurrency activities, as long as they do so responsibly to serve their customers. Activities that are now on the table for these institutions include buying and selling crypto at their customers' behest, as well as outsourcing crypto custody and execution services to third parties.
Yet, it's crucial to note that these services must comply with the OCC's safety standards and soundness criteria, ensuring proper oversight and risk management. Banks can even offer additional services like record keeping, tax, or reporting services related to cryptocurrency. Hood's final word? He wants these activities to be conducted in a safe and sound manner and in accordance with the law.
But it's not just the OCC jumping aboard the crypto bandwagon. The Federal Reserve and Federal Deposit Insurance Corporation (FDIC) have also demonstrated their progressive stance towards digital assets. The Fed removed its requirement for state banks to give notice before diving into crypto-related activities, and it scrapped guidelines limiting how banks could handle stablecoins. The FDIC, too, waived its requirement for state nonmember banks to give prior notice when engaging in crypto-asset activities.
In light of these recent shifts, a number of crypto firms have expressed interest in applying for banking licenses to expand their businesses and potentially reduce borrowing costs. A bank charter would boost their standing as legitimate business operations in the eyes of customers. In January this year, the Securities and Exchange Commission (SEC) eased restrictions on banks holding crypto by revoking a rule that previously forced them to classify crypto as liabilities.
Amidst this pro-crypto environment, Fed Governor Lael Brainard has even suggested that banks and non-banks should be able to issue stablecoins. So, sit back and buckle up! The future of banking and cryptocurrency is about to collide, and it's going to be quite the ride.
Enrichment Data:
- Following regulatory shifts, banks in the United States are experiencing a significant easing of restrictions related to crypto engagement.
- Key Developments:
- OCC Guidance: On March 7, 2025, the OCC reaffirmed that national banks and federal savings associations can participate in various cryptocurrency activities, including crypto custody, stablecoin activities, and independent node verification networks[1].
- Federal Reserve and FDIC Actions: The Federal Reserve announced the withdrawal of guidelines related to banks' crypto-asset activities on April 24, 2025[5], and the FDIC clarified that state nonmember banks can engage in crypto-asset activities without prior notice[3].
- Impact on Banks:
- Increased Flexibility: Banks are now granted more freedom to engage with digital assets, such as offeringcrypto services and banking to crypto businesses, provided they maintain proper risk management practices[5].
- Permissible Activities: While banks can engage in certain permissible crypto activities (like acting as a custodian of crypto assets) without prior approval, they must still comply with all applicable laws and effectively manage risks[4].
- Future Clarification Needed: Further guidance is expected on activities such as holding crypto assets on balance sheets or engaging in crypto lending, which are currently unclear[5].
- Overall Environment:
- Regulatory Easing: The shift reflects a broader trend of U.S. banking regulators promoting innovation in the digital asset space[2][5].
- Global Considerations: Institutions with a global presence must still align with Basel Committee standards and navigate international regulatory frameworks[5].
- As a result of regulatory changes, traditional banks in the United States are finding a greater freedom to explore and engage in the cryptocurrency industry.
- In alignment with these shifts, the OCC, on March 7, 2025, reaffirmed that national banks and federal savings associations can undertake various cryptocurrency activities, includingcrypto custody, stablecoin activities, and independent node verification networks.
- The Federal Reserve, on April 24, 2025, withdrew guidelines related to banks' crypto-asset activities, while the FDIC clarified that state nonmember banks can engage in crypto-asset activities without prior notice.
- This newfound freedom allows banks to increase their flexibility, offering cryptocurrency services and banking to crypto businesses, as long as proper risk management practices are maintained.
- While banks can participate in certain permissible crypto activities (such as acting as a custodian of crypto assets), further guidance is needed on activities like holding crypto assets on balance sheets or engaging in crypto lending.
