American banks can legally engage in encryption asset business.

Written by: FinTax

News Overview

On May 7, 2025, the Office of the Comptroller of the Currency (OCC) in the United States explicitly stated that banks may outsource cryptocurrency activities to third parties, including custody and execution services. As long as everything still complies with the safety and soundness requirements of the regulators, the OCC will grant banks more freedom in cryptocurrency.

The OCC clarified in interpretive letter No. 1183 that national banks and federal savings associations can legally engage in activities related to crypto assets, provided they meet relevant regulations and risk management requirements. This includes offering crypto asset custody services, participating in the issuance and settlement of stablecoins, and acting as nodes in distributed ledger networks, among other activities. The letter rescinded the requirement in interpretive letter No. 1179 issued in 2021 that banks must obtain written approval from the OCC before engaging in such activities, thereby streamlining the process for banks entering the crypto asset space. Additionally, the OCC withdrew a previously issued joint statement with other regulatory agencies concerning the risks of crypto assets, indicating a more open regulatory attitude towards crypto asset businesses.

FinTax Brief Review

1. The historical logic of regulatory easing: "Cautious - Open - Tighten - Re-ease"

The regulatory game between the U.S. banking sector and crypto assets began in 2013. At that time, the Federal Reserve banned banks from directly participating in the crypto-asset business on the grounds of "vague legal attributes" and "uncontrollable systemic risks". The underlying logic behind this ban stems from a number of factors: early crypto assets such as Bitcoin were not defined as "money" or "securities" by the Uniform Commercial Code, making it impossible for banks to apply existing regulatory rules; In 2014, Mt. Gox went bankrupt due to a private key management loophole, raising regulators' concerns about the risk transmission after the banking industry intervened; Traditional financial institutions such as Visa and JPMorgan Chase have jointly lobbied Congress to try to delay the impact of crypto on existing payment and clearing systems.

In 2020, the OCC issued Interpretation Letter No. 1174 for the first time, allowing banks to provide crypto asset custody services to their customers. The direct drivers of this shift include the surge in market demand and the improvement of technical compliance: according to Grayscale's official tweet released in December of that year, the total size of crypto assets under management (AUM) reached $12.2 billion, and institutional customers represented by Grayscale have the need to relax financial regulation, forcing a series of policy adjustments; At the same time, compliant stablecoins such as USDC have partially resolved asset transparency disputes through on-chain transparent audits and 100% fiat currency reserve mechanisms, providing more justification for crypto asset custody services.

With the change in the regulatory leadership, the OCC adjusted its previous open policy in 2021: Interpretive Letter No. 1179 requires banks to submit written notice to the regulatory agency and obtain "supervisory non-objection" approval before engaging in the aforementioned cryptocurrency business. This move is seen as a tightening of the previous open policy, reflecting the regulatory agency's concern over the potential risks of cryptocurrency assets, especially after the collapse of crypto platforms such as FTX in 2022.

In 2025, under the leadership of Acting Administrator Rodney E. Hood, the OCC will again adjust its policy and ease restrictions on banks engaging in cryptoasset business. Explanatory Letter 1183 revokes Letter 1179 and removes the requirement for banks to obtain "no objection to supervision" before engaging in cryptoasset business. It also reaffirms that the cryptoasset business described in Letters 1170, 1172 and 1174 is still considered legitimate as long as it meets the risk management and compliance requirements.

2. The applicable objects and business scope of the new regulations

3. Applicable objects:

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

2. Scope of Business:

According to the guidance from the OCC, national banks and federal savings associations can engage in cryptocurrency activities in the following three main areas:

(1) Crypto-Asset Custody Services

Banks are authorized to provide custody services for crypto assets on behalf of clients, including holding the private keys to cryptocurrencies. This service is viewed as a modern extension of traditional banking custody services, requiring banks to have appropriate risk management and compliance control measures in place.

( Stablecoin Reserve Management

Banks can accept deposits in US dollars as reserves for stablecoins, provided that these stablecoins are pegged to a single fiat currency at a 1:1 ratio and are custodied 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. In addition, banks can also use stablecoins to conduct payment transactions on distributed ledgers, which is seen as a modernization of traditional payment services.

3. Analysis of the Multidimensional Impact of the New Regulations

(1) Reshaping the Banking Business Model

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

Now that the policy has been loosened, it means that for the first time, banks have been officially "invited" by the system to enter the market, and their role is to be potential on-chain order-makers. From the perspective of infrastructure, banks are likely to lead the construction of compliant and credible on-chain payment and custody networks to replace the current dilemma of centralized platforms. From the perspective of customer structure, banks can connect with Web3 institutional funds, high-net-worth individuals, institutional investors and other high-trust funders to inject more stable incremental capital into the crypto market. From the perspective of business model, crypto custody, on-chain transaction matching, stablecoin clearing services and other businesses will become an important supplement for banks to get rid of the single dependence on net interest margin.

(2) Promoting the unification of compliance standards

The latest requirements from OCC emphasize that any business related to crypto assets 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. Moreover, this requirement is not only directed at the banks themselves but will subtly change the "behavioral paradigm" of the entire crypto industry.

In the past, the industry often used "technological decentralization" as a shield to exempt itself from compliance, while in the future, equivalence of financial functions, equivalence of regulatory risks, and equivalence of responsible entities will become the new compliance baseline. More importantly, this change is not imposed by regulatory orders but is spontaneously generated by banks participating as "credibility nodes" in market games within the system. In this process, the cryptocurrency industry will no longer be a "zone of exception" in law but will become part of a normative consensus order—this is precisely the direction of evolution of financial modernity in the context of new technologies.

(3) Reconstruction of the Regulatory Coordination Model

The OCC's interpretive letter is not an isolated case; it signals the U.S. multi-agency regulatory framework's pursuit of "boundary consensus." In recent years, the U.S. has faced ongoing disputes over cryptocurrency regulation, with the SEC, CFTC, FinCEN, OCC, and Fed each setting their own limits, resulting in fundamental uncertainty over "who is the primary regulator". This fragmentation of policy amid a multi-faceted power struggle not only increases compliance costs but also pushes financial innovation into a riskier territory in the face of regulatory ambiguity.

The OCC's proactive clarification of bank permissions is, in fact, an attempt to clarify the division of labor among institutions. This trend serves as a bellwether for the global landscape—countries such as the UK, EU, and Japan are also simultaneously advancing a cautious opening for banks' participation in crypto assets. If a unified digital asset framework is introduced at the federal level in the future (such as the Digital Commodity Exchange Act proposed by the U.S. Congress), such interpretive letters from the OCC may become institutional precedents and operational manuals, providing a foundational framework for subsequent legislation. In this sense, the OCC's new regulations are not just about "licensing"; they represent a shift in policy style: from suppressing technological uncertainty to embedded guidance and structural collaboration.

IV. Conclusion

OCC's confirmation of the bank's legal engagement in cryptoasset business marks a key step in U.S. financial regulation in the Web3 era. It is not just a policy statement, but also a "signal turn" to reconstruct the boundaries of banking business, guide the evolution of crypto compliance, and force the improvement of industry standards. For traditional banks, this is the ticket to enter the blue ocean of new asset services; For the crypto market, this is a milestone in being "accepted" by the mainstream financial system.