The Office of the Comptroller of the Currency (OCC) recently issued Interpretive Letter 1184 on May 7, clarifying that federally chartered banks and savings associations are permitted to offer cryptocurrency services such as custody and execution, including through third-party providers. This guidance is based on the condition that these institutions adhere to sound risk management practices and legal compliance.
The OCC’s clarification expands on and confirms earlier guidance related to crypto activities, allowing institutions to buy and sell assets held in custody at the customer’s direction and outsource crypto-asset functions to third parties. These activities are subject to the same oversight and operational standards applied to traditional financial services, including due diligence, third-party risk management, and cybersecurity protocols.
This latest guidance builds on prior OCC guidance outlined in Interpretive Letters 1170 and 1183, reinforcing the regulator’s view that digital asset services can fall within the scope of permissible banking activities when conducted safely and in compliance with applicable regulations.
The regulatory context for this clarification stems from a policy shift announced by the OCC on March 7, removing the requirement for prior regulatory approval for certain crypto-related activities. This departure from previous supervisory practices under former President Joe Biden’s administration streamlines oversight while maintaining high safety standards for national banks engaging in crypto-asset custody, stablecoin activities, and participation as validators on distributed ledger networks.
Interpretive Letter 1184 formally integrates execution services and sub-custodian relationships into the scope of authorized activity, emphasizing the need for institutions to manage associated risks, whether handling crypto services internally or through third parties. This updated position reaffirms crypto services as permissible under existing authorities and signals continued regulatory normalization of digital asset services within the US banking sector.
In conclusion, the OCC’s guidance provides clarity for federally chartered banks and savings associations looking to offer cryptocurrency services, highlighting the importance of sound risk management practices and legal compliance in integrating these services into their operations.