OCC Reinforces Banks’ Permission to Provide Cryptocurrency Services Without Prior Authorization

The Office of the Comptroller of the Currency (OCC) clarified on May 7 that banks and savings associations with federal charters can provide cryptocurrency services. This includes custody and execution services, which may involve third-party providers, as long as they follow proper risk management and legal guidelines.

This clarification, conveyed through Interpretive Letter 1184, broadens previously issued guidance regarding cryptocurrency operations.

The OCC indicated that these institutions can facilitate the buying and selling of assets held in custody based on customer instructions, and they can delegate crypto-related activities, such as custody and trade execution, to third parties.

Such activities are still governed by the same standards and oversight that apply to conventional financial services, including risk assessments, third-party management, and cybersecurity measures.

The letter expands on prior OCC directives mentioned in Interpretive Letters 1170 and 1183, reaffirming the regulator’s stance that digital asset services may be permissible banking operations when conducted safely and in compliance with relevant regulations.

Regulatory context and policy shift

This clarification follows a policy shift announced by the OCC on March 7, which eliminated the necessity for prior regulatory approval for specific cryptocurrency-related activities.

This earlier announcement marked a departure from the previous supervisory protocols under the former Biden administration, requiring banks to notify examiners and secure a letter of no objection before they could engage in cryptocurrency services.

In its March update, the OCC confirmed that national banks can participate in crypto-asset custody and stablecoin operations and even take roles as validators on blockchain networks.

This revised guidance effectively overturned earlier cautionary statements and eliminated procedural barriers, allowing banks to integrate cryptocurrency services without needing prior consent.

At that time, the acting comptroller of the currency, Rodney Hood, stated that the OCC intended to streamline oversight while upholding rigorous safety standards.

Reinforcing permission

The May 7 letter builds upon that policy framework by formally including execution services and sub-custodian relationships as part of the authorized activities.

The OCC emphasized that institutions must oversee the risks involved, whether they provide cryptocurrency services in-house or through external partners.

Interpretive Letter 1184 reaffirms that federally regulated banks can engage with digital assets in a custodial role, provided these activities are conducted with adequate protections and comply with federal banking regulations.

The OCC’s updated stance reinforces that crypto services are permissible under current authorities and reflects a trend toward greater regulatory integration of digital asset services within the US banking industry.