OCC Wants Banks to Seek Permission Before Offering Crypto Services

The letter comes as the OCC gears up for further digital asset regulation alongside other bank regulators.

AccessTimeIconNov 23, 2021 at 7:08 p.m. UTC
Updated May 11, 2023 at 6:33 p.m. UTC

The U.S. Office of the Comptroller of the Currency (OCC) wants banks to be very sure they can provide crypto services before they do so.

The federal bank regulator published an interpretative letter Tuesday telling banks to be very clear they can comply with existing regulations involving stablecoins and other cryptocurrency services if they want to begin offering custody or node verification services.

The letter discussed three other interpretative letters issued last year under former Acting Comptroller Brian Brooks, which allowed banks to provide these services.

“This letter clarifies that the activities addressed in those interpretive letters are legally permissible for a bank to engage in, provided the bank can demonstrate, to the satisfaction of its supervisory office, that it has controls in place to conduct the activity in a safe and sound manner,” Tuesday’s letter said.

The OCC made waves under Brooks last year when it published an interpretative letter in July allowing banks to provide crypto custody services to customers.

Banks could provide both fiduciary and non-fiduciary services under the letter, which also noted that crypto custody would differ from custody services for other types of assets.

Later that year, the OCC also published guidance for banks that want to provide services to stablecoin issuers that hold stablecoins in hosted wallets.

The OCC also granted banks permission to operate nodes in blockchain networks in the beginning of 2021, should they want to, essentially comparing blockchain networks to ACH.

In Tuesday’s letter, the regulator said banks should seek permission before they begin offering any services in crypto.

“The bank should not engage in the activities until it receives written notification of the supervisory office’s non-objection. In deciding whether to grant supervisory non-objection, the supervisory office will evaluate the adequacy of the bank’s risk management systems and controls, and risk measurement systems, to enable the bank to engage in the proposed activities in a safe and sound manner,” the letter said.

Another section of the letter addresses charters issued to firms for the purposes of custodying crypto.

“The OCC retains discretion to determine if an applicant’s activities that are considered trust or fiduciary activities under state law are considered trust or fiduciary activities for purposes of applicable federal law,” the letter said.

It did not hint at whether the OCC plans to continue issuing charters for crypto custodians, or otherwise revoke the conditional charters already issued to firms including Anchorage and Paxos.

Earlier Tuesday, the OCC joined the Federal Deposit Insurance Corporation and the Federal Reserve in announcing a 2022 timeline for issuing more guidance around banks and how they can interact with digital assets.


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Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

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