On March 7, 2025, the Office of the Comptroller of the Currency (OCC) issued guidance on national bank and federal savings association participation in certain cryptocurrency activities ("IL 1183"). This guidance is the latest step by federal regulators to remove impediments to banks and financial services institutions to engage in crypto-related businesses.
In IL 1183, the OCC reaffirms the permissibility of certain cryptocurrency-related activities for OCC-regulated institutions and rescinds requirements for OCC-supervised institutions1 to receive supervisory nonobjection and demonstrate that they have adequate controls in place before they can engage in these cryptocurrency activities.
In this Legal Update, we provide context to IL 1183 and what it means for the crypto sector.
Background
During the first Trump Administration, the OCC had authorized national banks and federal savings associations to engage in certain crypto-asset activities.2 However, under the Biden Administration, federal banking regulators undertook a series of joint efforts to pull back that authorization and narrow the legal authorities of supervised institutions beginning in November 2021. As part of these efforts, the OCC issued an interpretive letter (the "2021 Letter") limiting the scope of its prior authorizations; each federal banking regulator imposed prior notification/approval requirements for crypto-assets; and the Federal Reserve and OCC issued approval orders that implied certain crypto-asset activities are not permissible for banking organizations.3 The Federal Reserve also finalized a policy statement to deter uninsured state banks from seeking membership in the Federal Reserve System as a way to engage in novel activities, such as those involving crypto-assets, or obtain access to Federal Reserve services. This negative regulatory climate continued through the end of the Biden Administration.
OCC Reassessment
Under the 2021 Letter, OCC-supervised institutions were permitted to engage in certain cryptocurrency-related activities but only after demonstrating to the OCC that they had adequate controls and receiving supervisory nonobjection from the agency.
IL 1183 is brief and primarily rescinds the 2021 Letter imposing the nonobjection and affirmative risk management obligations.
While every activity of a bank is expected to be conducted in a safe and sound manner, rarely are institutions required to affirmatively demonstrate the adequacy of internal controls prior to engaging in the activity. Instead, institutions are expected to manage their affairs in a prudent manner, and that management is continuously supervised by the OCC through the bank examination process. IL 1183 returns to this longstanding approach by removing the additional procedures that applied only to banks seeking to engage in permissible cryptocurrency-related activities.
IL 1183 confirms that crypto-asset custody, certain stablecoin activities, and participation in independent node verification networks are permissible for OCC-supervised institutions. While this was equally true under the November 2021 guidance, in practice it was difficult for institutions to convince the OCC that they had sufficient controls in place to engage in these activities. The nonobjection process effectively became an insurmountable impediment to engaging in permissible activities.
IL 1183 also withdraws the OCC's participation in the interagency statements on (i) crypto-asset risks to banking organizations and (ii) liquidity risks to banking organizations resulting from crypto-asset market vulnerabilities. Those statements were issued with the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) and generally took a negative view on the management of risks emanating from the crypto sector.
Conclusion
The issuance of IL 1183 is the first step by the OCC to embrace President Trump's fundamental shift in federal policy on digital assets and follows in the footsteps of other federal agencies such as the Securities and Exchange Commission (SEC).4
We expect that the OCC will seriously consider the issuance of guidance that recognizes the business of banking encompasses a wider range of cryptocurrency-related activities.5 This is likely to include bank issuance of stablecoins and similar payment intermediation tokens.
We expect that the FDIC shortly will rescind its similar positions on cryptocurrency, including its participation in the interagency statements on crypto-asset risks. In addition, we expect all three federal banking regulators will join together to remove the discussion of the SEC's now-repealed SAB 121 from the instructions for banks' quarterly Call Reports.6
The OCC's new posture toward cryptocurrency activities is likely to lead to greater bank participation in cryptocurrency-related activities. It also may make it easier for nonbank crypto market participants to receive traditional banking services, such as operating deposit accounts and working capital loans. Please stay tuned for more good news.
Footnotes
1. OCC-supervised institutions include national banks and federal savings associations.
2. See, e.g., OCC, Interp. Ltr. 1170 (July 22, 2020); OCC, Interp. Ltr. 1172 (Sept. 21, 2020); OCC, Interp. Ltr. 1174 (Jan. 4, 2021).
3.See our Legal Update on these restrictions:
"Hitting a Moving Target: Federal Banking
Regulators' Latest Commentary on Crypto-Asset
Risks."
4. See our earlier Legal Update on President Trump's
agenda: "President Trump's First Week in Office is a
Momentous One for Digital Assets: An Executive Order, Repeal of SAB
121 and a Clear Statement on Trump Administration Support for
Comprehensive Regulatory Reform."
5.See 12 C.F.R. § 7.1000.
6.See Supplemental Instructions at 2 (Dec. 23, 2024).
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