U.S. banks can legally engage in cryptocurrency-related businesses
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U.S. banks can legally engage in cryptocurrency-related businesses
As long as everything continues to meet the safety and soundness requirements of regulators, the OCC will grant banks greater cryptocurrency freedom.
Navigating Web3 tides with focused insightsAuthor: Fintax
News Overview
On May 7, 2025, the Office of the Comptroller of the Currency (OCC) clarified that banks may outsource cryptocurrency-related activities to third parties, including custody and execution services. As long as such activities remain compliant with regulators’ safety and soundness requirements, the OCC is granting banks greater freedom in engaging with crypto assets.
The OCC issued Interpretive Letter No. 1183, explicitly stating that national banks and federal savings associations may lawfully engage in crypto asset-related activities provided they meet applicable regulatory and risk management requirements. These activities include offering crypto asset custody services, participating in stablecoin issuance and settlement, and serving as nodes on distributed ledger networks. The letter revokes the requirement established in Interpretive Letter No. 1179 from 2021, which mandated prior written approval from the OCC before banks could conduct such activities, thereby streamlining the process for banks entering the crypto asset space. Additionally, the OCC has withdrawn from a previous joint statement with other regulators regarding risks associated with crypto assets, signaling a more open regulatory stance toward crypto-related banking activities.
FinTax Commentary
I. Historical Logic of Regulatory Easing: "Cautious → Open → Tightened → Reopened"
The regulatory tug-of-war between U.S. banking and crypto assets began in 2013. At that time, the Federal Reserve prohibited banks from directly engaging in crypto asset activities due to concerns over "unclear legal status" and "uncontrollable systemic risks." This ban stemmed from multiple factors: early cryptocurrencies like Bitcoin were not defined as "money" or "securities" under the Uniform Commercial Code, leaving banks without a clear regulatory framework; the 2014 collapse of Mt. Gox due to private key management flaws raised concerns about risk contagion if banks became involved; and traditional financial institutions such as Visa and JPMorgan Chase had lobbied Congress together to delay the disruptive impact of crypto technology on existing payment and clearing systems.
In 2020, the OCC issued Interpretive Letter No. 1174, marking the first regulatory easing by allowing banks to provide crypto asset custody services to customers. This shift was driven directly by surging market demand and improved technological compliance: according to a December tweet from Grayscale, its total assets under management (AUM) in crypto reached $12.2 billion that year. Institutional clients like Grayscale sought looser financial regulation, prompting a series of policy adjustments. Meanwhile, compliant stablecoins such as USDC, through on-chain transparent audits and 100% fiat reserves, partially resolved disputes over asset transparency, providing further legitimacy for crypto custody services.
With changes in leadership, the OCC adjusted its earlier liberal policies in 2021: Interpretive Letter No. 1179 required banks to submit written notice and obtain "supervisory non-objection" before engaging in such crypto activities. This move was seen as tightening prior openness, reflecting regulator concerns over potential crypto risks—especially following the 2022 collapse of platforms like FTX.
In 2025, under Acting Comptroller Rodney E. Hood, the OCC once again revised its policy, relaxing restrictions on banks' crypto activities. Interpretive Letter No. 1183 revoked Letter No. 1179, eliminating the requirement for prior "supervisory non-objection." It reaffirmed that crypto activities outlined in Letters No. 1170, 1172, and 1174 remain lawful as long as risk management and compliance requirements are met.
II. Scope of Application and Covered Activities
1. Applicable Entities:
OCC Interpretive Letter No. 1183 applies explicitly to two types of financial institutions: National Banks and Federal Savings Associations.
2. Permitted Activities:
According to OCC guidance, national banks and federal savings associations may engage in crypto asset activities within three primary areas:
(1) Crypto-Asset Custody Services
Banks are authorized to offer crypto asset custody services to clients, including holding private keys for cryptocurrencies. This service is viewed as a modern extension of traditional bank safekeeping functions, requiring appropriate risk management and compliance controls.
(2) Stablecoin Reserve Management
Banks may accept U.S. dollar deposits serving as reserves for stablecoins, provided these stablecoins are pegged 1:1 to a single fiat currency and held in custody by the bank. Such activities require adherence to anti-money laundering regulations and safeguards for customer funds.
(3) Participation in Distributed Ledger Networks
Banks are permitted to act as nodes on distributed ledger networks (e.g., blockchains) to validate and record client payment transactions. Additionally, banks may use stablecoins to conduct payment transactions on distributed ledgers, a practice considered a modernized form of traditional payment services.
III. Multi-Dimensional Impact Analysis of the New Rules
(1) Reshaping Banking Business Models
The OCC's policy relaxation signifies the dismantling of high barriers between traditional banks and the crypto market. Banks will no longer be confined to peripheral roles but can now enter core functions such as infrastructure operation, asset custody, and on-chain payment clearing.
This regulatory opening formally invites banks into the ecosystem, positioning them as potential architects of on-chain order. From an infrastructure perspective, banks could lead the development of compliant and trustworthy on-chain payment and custody networks, replacing the recurring failures of centralized platforms. In terms of client base, banks can connect with Web3 institutional capital, high-net-worth individuals, and institutional investors who prioritize trust, injecting more stable incremental capital into the crypto market. From a business model standpoint, services such as crypto custody, on-chain transaction matching, and stablecoin clearing could become vital supplements to reduce reliance on net interest margins.
(2) Driving Standardization of Compliance Frameworks
The OCC’s latest guidance emphasizes that all crypto-related activities must meet “equivalent regulatory standards.” This means traditional banks must transplant their familiar KYC/AML, operational security, and risk control systems into highly heterogeneous on-chain environments. This requirement does not merely apply to banks themselves—it will gradually reshape the entire crypto industry’s behavioral norms.
In the past, the industry often used “technological decentralization” as a shield against compliance obligations. Going forward, functional equivalence in finance, equivalent regulatory risk, and equivalent liability attribution will become new compliance baselines. More importantly, this shift will not be imposed solely by regulatory mandate but will emerge organically as banks—acting as “reputation nodes” within the system—participate in market dynamics. In this process, the crypto industry will cease to be a legal exception zone and instead become part of a regulated consensus order—a true evolution of financial modernity within new technological contexts.
(3) Restructuring Regulatory Coordination Models
The OCC’s interpretive letter is not isolated—it signals an effort within the U.S. multi-agency regulatory framework to establish “boundary consensus.” In recent years, regulatory disputes over crypto in the U.S. have persisted, with agencies such as the SEC, CFTC, FinCEN, OCC, and the Fed each asserting jurisdiction, creating fundamental uncertainty over “who is the primary regulator.” This fragmented policymaking under multi-agency competition increases compliance costs and pushes financial innovation toward risky paths amid regulatory ambiguity.
By proactively clarifying banks’ authorities, the OCC is effectively attempting to clarify inter-agency responsibilities—a trend with global signaling effects. The UK, EU, Japan, and others are similarly advancing cautious openings for bank participation in crypto. If a unified federal digital asset framework emerges in the future—such as the proposed Digital Commodity Exchange Act in Congress—the OCC’s interpretive letters could serve as institutional precedents and operational manuals, laying the groundwork for future legislation. In this sense, the OCC’s new rules represent not just a “permission,” but a shift in policy philosophy—from suppressing technological uncertainty toward embedded guidance and structural coordination.
IV. Conclusion
The OCC’s confirmation of banks’ ability to legally engage in crypto asset activities marks a critical step forward for U.S. financial regulation in the Web3 era. It is more than just a policy announcement—it represents a signal-driven turning point that redefines banking boundaries, guides the evolution of crypto compliance, and pressures the industry to elevate its standards. For traditional banks, it is a ticket to enter the blue ocean of new asset services; for the crypto market, it is a milestone moment of acceptance by the mainstream financial system.
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