US Banks Can Now Custody Crypto: OCC Guidance
US Banks Get Green Light for Crypto Custody and Stablecoin Services
The Office of the Comptroller of the Currency (OCC) has issued new guidance (Interpretive Letter 1183) permitting national banks and federal savings associations to offer cryptocurrency custody and stablecoin services without needing prior regulatory approval. This is a significant development, addressing concerns about restrictive banking practices.
OCC Streamlines Crypto Integration for Banks
This decision clarifies that banks can engage in crypto-related activities under existing banking laws. The previous requirement for supervisory non-objection has been removed, streamlining the process for banks to integrate digital assets into their offerings. However, the OCC stresses the importance of robust risk management, comparable to traditional banking operations. Acting Comptroller Rodney E. Hood emphasized that this decision reduces barriers for banks interested in crypto-related activities.
“The OCC expects banks to have the same strong risk management controls in place to support novel bank activities as they do for traditional ones,” said Rodney E. Hood.
This announcement follows legal challenges and pushback against what some considered unfair regulations. The Coinbase CEO recently sued the FDIC for attempting to sever ties between banking and crypto. Industry figures like Circle CEO Jeremy Allaire have welcomed the news.
“Let’s go! Banks using USDC. Coming soon to a blockchain near you,” expressed Allaire.
Analysts like Marty Party highlight the potential economic impact, suggesting the decision will allow US banks to serve as validators on public networks, hold stablecoins, and offer crypto custody to customers. Scott Melker lauded the OCC’s reaffirmation that crypto activities are permissible within the US federal banking system.
Bank of America’s potential involvement is noteworthy, as the bank previously indicated its intention to launch a stablecoin if US regulations allowed.
Cautious Optimism: Not a Complete Green Light
While widely celebrated, some, like Custodia Bank CEO Caitlin Long, caution that broader regulatory hurdles remain. Anti-crypto guidance from the Federal Reserve (Fed) and FDIC is still in effect, creating ongoing challenges for banks aiming for full integration of digital asset services.
“Amid all the jubilation about the OCC news, Operation Choke Point 2.0 isn’t over until: 1. Fed & FDIC also rescind their anti-crypto guidance, which is still in effect, and 2. Custodia Bank has its Fed master account,” Long explained.
Custodia Bank’s previous denial of a master account from the Federal Reserve highlights the ongoing complexities. HashKey Group’s Ben El-Baz offers a more optimistic outlook, suggesting the OCC’s move might influence the Fed and FDIC to adopt similar positions.
“On a more optimistic note, it is possible that the OCC as a first mover helps push along subsequent aligned guidance from FDIC and the Fed,” Baz opined.
This positive step will likely take time for banks to fully integrate. At Codeum, we provide comprehensive blockchain security solutions, including smart contract audits, KYC verification, and custom smart contract and DApp development to support the evolving crypto ecosystem. We are committed to securing the future of blockchain technology.