As long as everything still meets the safety and soundness requirements of regulatory agencies, the OCC will grant banks more freedom in cryptocurrency.

Written by: Fintax

News Overview

On May 7, 2025, the Office of the Comptroller of the Currency (OCC) made it clear that banks can outsource cryptocurrency activities to third parties, including custody and execution services. As long as everything still meets the safety and soundness requirements of regulatory agencies, the OCC will grant banks more freedom in cryptocurrency.

The OCC clarified through the issuance of Interpretive Letter No. 1183 that national banks and federal savings associations can legally engage in cryptocurrency-related businesses, provided they meet relevant regulatory and risk management requirements. This includes providing cryptocurrency custody services, participating in stablecoin issuance and settlement, and acting as nodes in distributed ledger networks. The letter rescinded the requirement from Interpretive Letter No. 1179 issued in 2021 that banks must obtain written approval from the OCC before engaging in such activities, simplifying the process for banks to enter the cryptocurrency space. Additionally, the OCC withdrew a previous joint statement with other regulatory agencies regarding the risks of cryptocurrency assets, demonstrating a more open regulatory attitude towards cryptocurrency business.

FinTax Commentary

I. Historical Logic of Regulatory Easing: "Cautious—Open—Tighten—Reopen"

The regulatory game between the U.S. banking industry and cryptocurrency assets began in 2013. At that time, the Federal Reserve prohibited banks from directly participating in cryptocurrency activities, citing "ambiguous legal attributes" and "uncontrollable systemic risks." The underlying logic of this ban stemmed from multiple factors: early cryptocurrencies like Bitcoin were not defined as "currency" or "securities" under the Uniform Commercial Code, preventing banks from applying existing regulatory rules; the 2014 bankruptcy of Mt. Gox due to private key management vulnerabilities raised concerns among regulators about risk transmission after banks' involvement; traditional financial institutions like Visa and JPMorgan had lobbied Congress to delay the impact of cryptocurrency technology on the existing payment and clearing systems.

In 2020, the OCC issued Interpretive Letter No. 1174, which marked the first easing of regulations, allowing banks to provide cryptocurrency custody services for customers. The direct motivations for this shift included a surge in market demand and improved technological compliance: according to a tweet from Grayscale published in December of that year, its total assets under management (AUM) reached $12.2 billion, and institutional clients represented by Grayscale had a demand for relaxed financial regulations, prompting a series of policy adjustments; at the same time, compliant stablecoins like USDC, through on-chain transparent audits and a 100% fiat reserve mechanism, partially alleviated asset transparency disputes, providing more legitimacy for cryptocurrency custody services.

With changes in regulatory leadership, the OCC adjusted its previous open policies in 2021: Interpretive Letter No. 1179 required banks to submit written notice to regulators and obtain "supervisory non-objection" approval before engaging in the aforementioned cryptocurrency activities. This move was seen as a tightening of previous open policies, reflecting regulators' concerns about the potential risks of cryptocurrency assets, especially after the collapse of cryptocurrency platforms like FTX in 2022.

In 2025, under the leadership of Acting Comptroller Rodney E. Hood, the OCC adjusted its policies again, easing restrictions on banks engaging in cryptocurrency activities. Interpretive Letter No. 1183 rescinded the requirement from Letter No. 1179 that banks must obtain "supervisory non-objection" before engaging in cryptocurrency activities. It also reaffirmed that cryptocurrency-related businesses, as described in Letters No. 1170, 1172, and 1174, are still considered legal as long as they meet risk management and compliance requirements.

II. Applicable Entities and Scope of New Regulations

1. Applicable Entities:

Interpretive Letter No. 1183 from the OCC clearly applies to the following two types of financial institutions: National Banks and Federal Savings Associations.

2. Scope of Business:

According to the OCC's guidance, National Banks and Federal Savings Associations can engage in cryptocurrency-related businesses in the following three main areas:

(1) Crypto-Asset Custody Services

Banks are authorized to provide custody services for cryptocurrency assets for customers, including holding private keys for cryptocurrencies. This service is seen as a modern extension of traditional banking custody services, requiring banks to have appropriate risk management and compliance control measures.

(2) Stablecoin Reserve Management

Banks can accept U.S. dollar deposits as reserves for stablecoins, provided that these stablecoins are pegged to a single fiat currency at a 1:1 ratio and are held in custody by the bank. This business requires banks to comply with anti-money laundering regulations and ensure the safety of customer funds.

(3) Participation in Distributed Ledger Networks

Banks are allowed to participate as nodes in distributed ledger networks (such as blockchain) to verify and record customer payment transactions. Additionally, banks can use stablecoins for payment transactions on distributed ledgers, which is seen as a modernization of traditional payment services.

III. Multidimensional Impact Analysis of the New Regulations

(1) Reshaping of Bank Business Models

The OCC's policy relaxation means that the high walls between traditional banks and the cryptocurrency market are being broken down. Banks will no longer be limited to the role of "peripheral service providers" for cryptocurrency but can truly enter core areas such as infrastructure operation, asset custody, and on-chain payment clearing.

The current policy loosening means that banks are formally "invited" into the market for the first time, with the potential role of on-chain order creators. From an infrastructure perspective, banks may lead the construction of compliant and trustworthy on-chain payment and custody networks, replacing the current predicament of centralized platforms frequently facing crises; from a customer structure perspective, banks can connect with Web3 institutional funds, high-net-worth individuals, and institutional investors, injecting more stable incremental capital into the cryptocurrency market; and from a business model perspective, cryptocurrency custody, on-chain transaction matching, and stablecoin clearing services will become important supplements for banks to break free from reliance on net interest margins.

(2) Promotion of Unified Compliance Standards

The OCC's latest requirements emphasize that any cryptocurrency-related business must meet "equivalent regulatory requirements." This means that the KYC/AML, operational security, and risk control systems that traditional banks are accustomed to must be transplanted into the highly heterogeneous on-chain environment. This requirement not only targets banks themselves but will also subtly change the "behavioral paradigm" of the entire cryptocurrency industry.

In the past, the industry often used "technological decentralization" as a shield against compliance, but in the future, equivalence in financial functions, regulatory risks, and responsible parties will become the new compliance baseline. More importantly, this change is not imposed by regulatory orders but is spontaneously generated by banks as "reputable nodes" participating in market games. In this process, the cryptocurrency industry will no longer be a "legal exception zone" but will become part of a consensus order governed by regulations—this is precisely the direction of financial modernity in the context of new technologies.

(3) Reconstruction of Regulatory Coordination Models

The OCC's interpretive letter is not isolated; it signals a search for "boundary consensus" within the multi-agency regulatory framework in the U.S. In recent years, the U.S. has faced ongoing disputes over cryptocurrency regulation, with the SEC, CFTC, FinCEN, OCC, and Fed each setting limits, leading to fundamental uncertainty about "who is the primary regulator." This fragmentation of policies under multiple heads not only increases compliance costs but also pushes financial innovation towards risk-taking in a regulatory gray area.

The OCC's proactive clarification of bank permissions is, in fact, an attempt to clarify inter-agency division of labor, and this trend is significant globally—countries like the UK, EU, and Japan are also simultaneously promoting cautious openness for banks' participation in cryptocurrency assets. If a unified federal digital asset framework is introduced in the future (such as the proposed Digital Commodity Exchange Act in Congress), OCC's interpretive letters may become institutional precedents and operational manuals, providing a basis for subsequent legislation. In this sense, the OCC's new regulations are not just "permissions" but also a shift in policy style: from suppressing technological uncertainty to embedded guidance and structural collaboration.

IV. Conclusion

The OCC's confirmation that banks can legally engage in cryptocurrency activities marks a key step in U.S. financial regulation in the Web3 era. It is not just a policy statement but a "signal shift" that reconstructs the boundaries of bank operations, guides the evolution of cryptocurrency compliance, and compels the enhancement of industry standards. For traditional banks, this is a ticket to enter the new asset service blue ocean; for the cryptocurrency market, this is a milestone of being "accepted" by the mainstream financial system.

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