The Office of the Comptroller of the Currency (OCC) and the
Federal Deposit Insurance Corporation (FDIC) each recently took
action to clarify prior interpretive guidance regarding the
authority of banking organizations to engage in certain
crypto-asset activities.16 These represent the first of
potentially several actions by the federal banking agencies to
advance the objective of promoting innovation and technology
adoption1 through the establishment of a clear
supervisory framework for banks' engagement in crypto-asset
activities. This objective is aligned with the broader objective of
the Trump administration to promote the United States as a leader
with respect to crypto-assets and financial technology, as
expressed in an executive order issued in the first week of the
administration.2
This Advisory summarizes the recent actions of the OCC and FDIC, as
well as the stance of the Board of Governors of the Federal Reserve
System (Federal Reserve) and certain related initiatives and
developments. This Advisory also highlights important takeaways for
banking organizations as the federal banking agencies recalibrate
their approach to the regulation of crypto-assets and the
engagement by banking organizations in crypto-asset-related
activities. We note that this Advisory uses the term
"crypto-asset" to refer generally to any asset based on
distributed ledger technology (DLT). As the regulatory framework
for crypto-assets and banking activities relating to crypto-assets
continues to materialize, efforts may be made by the federal
banking agencies and other federal regulators to more clearly
distinguish between the various terms used in practice to define
crypto-assets (including "cryptocurrencies" and
"digital assets").
This Advisory is one in a series that will explain the evolving
landscape of crypto-assets under the Trump administration and the
current Congress, and the implications for banking organizations
and other financial services firms.
OCC Interpretive Letter No. 1183
On March 7, 2025, through the issuance of Interpretive Letter
1183 (IL 1183),3 the OCC re-affirmed that crypto-asset
custody and certain DLT and stablecoin activities are permissible
for national banks. OCC interpretations of the National Bank Act
are important because they expand or shrink the activities in which
national banks may engage. In addition, because of state "wild
card" statutes and Federal Reserve policy, the OCC's
interpretations carry through to the powers that state-chartered
banks supervised by the FDIC and Federal Reserve may exercise as
well.4
The OCC initially established the permissibility of such activities
through the issuance in 2020 of Interpretive Letters
11705 (allowing national banks to provide custody
services to customers related to cryptocurrency), 11726
(allowing national banks to accept dollar deposits as reserves for
stablecoins), and 11747 (allowing national banks to act
as nodes on certain DLT networks in order to verify customer
payments, and engage in the facilitation of payments on a DLT
network) (IL 1174). The utility to national banks of those
interpretive letters was later muted by the issuance of
Interpretive Letter 1179 (IL 1179).8
IL 1179, which was rescinded by IL 1183, established a supervisory
non-objection process for engagement in national bank-permissible
crypto-asset activities. In practice, IL 1179 functioned as a
gating mechanism for the OCC, and by extension the other federal
banking agencies, to restrict engagement by depository institutions
in crypto-asset activities. With that mechanism now lifted,
national banks are authorized to engage in permissible crypto-asset
activities on the condition that such activities are conducted in
accordance with safe and sound banking principles and carried out
in a manner consistent with the bank's risk management
practices and overall business plans and strategies, and with the
understanding that such activities will be subject to examination
as part of the OCC's routine supervisory process.
In connection with the issuance of IL 1183, the OCC also withdrew
from two interagency statements issued during the Biden
administration regarding liquidity and other risks posed to banking
organizations by crypto-assets and/or crypto-asset market
features.9 Those statements established a very high bar,
both as a substantive regulatory matter and with regard to
supervisory procedure, for banking organizations to overcome in
order to demonstrate that certain crypto-asset-related risks could
be managed effectively and relevant activities carried out in a
safe and sound manner.10 From that perspective, national
banks eager to commence or increase their engagement in
crypto-asset activities may welcome the OCC's actions. By
contrast, however, the interagency statements covered substantial
ground and highlighted supervisory expectations for the management
of risks that the OCC may closely monitor as part of the
supervisory process — such as fraud, liquidity market
concentration and volatility, unfair and deceptive practices,
third-party risk management, and operational resiliency — and
the absence of this guidance may introduce some level of
uncertainty into future examinations of national banks that
commence or expand crypto-asset activities in the near-term.
FDIC Financial Institutions Letter 7-2025
On March 28, 2025, the FDIC issued Financial Institutions Letter
7-2025 (FIL 7-2025),11 which rescinds Financial
Institutions Letter 16-202212 and clarifies the
FDIC's supervisory approach to the crypto-asset activities of
state nonmember banks. FIL 7-2025 establishes that state nonmember
banks may engage in crypto-asset activities, without notifying or
seeking the prior approval of the FDIC, provided that the bank can
adequately manage relevant risks and conduct any such activities in
a safe and sound manner. FIL 7-2025 also provides that state
nonmember banks "should consider" risks and operational
issues associated with crypto-asset activities — such as
market and liquidity risk, cybersecurity risk, consumer protection
requirements, and anti-money laundering (AML) requirements —
and engage with FDIC supervisory staff "as appropriate,"
but does not prescribe a formal pre-activity risk assessment
process or explicitly require notice to the FDIC staff, whether
prior to or after commencement of a crypto-asset-related
activity.
FIL 7-2025 also notes that the FDIC intends to coordinate with the
other federal banking agencies to replace the interagency guidance
regarding crypto-asset-related risks and risk management from which
the OCC withdrew as discussed above.
Federal Reserve Developments
While the OCC and FDIC have taken steps to remove legal and
supervisory impediments to engagement by banking organizations in
crypto-asset-related activities, the Federal Reserve to date has
not taken comparable action. In 2022, the Federal Reserve issued SR
Letter 22-6,13 which addressed supervisory expectations
and procedures for engagement by banking organizations supervised
by the Federal Reserve, including bank holding companies and state
member banks, for engagement in crypto-asset-related activities.
Importantly, SR Letter 22-6 requires banking organizations to
ensure that proposed activities are legally permissible and to
notify Federal Reserve supervisory staff (and, for state member
banks, the staff of their state chartering authority) prior to
engagement in such activities. Under the Federal Reserve's
guidance, banking organizations are expected, prior to engaging in
any proposed crypto-asset activities, to have implemented adequate
systems, risk management processes, and internal controls —
specifically addressing operational risk, financial risk, legal
risk, and compliance risk — to ensure that the activities are
conducted in a safe and sound manner and in compliance with
applicable laws and regulations. While SR Letter 22-6 does not
explicitly impose a prior approval requirement, it prescribes a
comprehensive pre-activity risk assessment requirement and, through
the supervisory notification process, has created a mechanism for
the Federal Reserve staff to question proposed crypto-asset
activities in a way that could significantly delay or deter a
banking organization from engaging in such activity. Relatedly, in
August 2023, the Federal Reserve issued SR Letter 23-8, which
established a supervisory non-objection process for state member
banks seeking to engage in activities covered by IL 1174, including
using DLT or similar technologies to issue, hold, or transact in
dollar-denominated tokens.14
The Federal Reserve also continues to maintain a Novel Activities
Supervision Program (the Program),15 which is focused on
activities including crypto-asset-related activities, DLT-related
activities, and other technology-driven activities and engagements.
The Program effectively provides an additional layer of risk-based
oversight of novel activities conducted by Federal
Reserve-supervised banking organizations.
As described above, it is well established that state member banks
generally are afforded the same powers as national banks and
therefore, in consideration of the OCC's issuance of IL 1183,
there should be no legal impediment to the engagement by state
member banks in national bank-permissible crypto-asset activities.
(Bank holding company powers present a more complex picture.)
Accordingly, the Federal Reserve has been pressured by certain
stakeholders to relax applicable supervisory requirements as the
OCC and FDIC have done. By a letter dated March 31, 2025,
Republican members of the Financial Services Committee of the U.S.
House of Representatives called on the Federal Reserve to rescind
SR Letters 22-6 and 23-8 on the basis that those letters impose
"unnecessary supervisory burdens" on the use of
DLT.
Nevertheless, it is unclear how those letters, as well as the
Program and other relevant Federal Reserve regulations, policy
statements, and guidance,17 will be administered in
practice in the months ahead in light of recent developments.
Federal Reserve Chair Jerome Powell has commented favorably,
including before Congress, on the authority of banking
organizations to provide certain crypto-asset-related services,
such as custody, to their customers;18 however, to date
this endorsement has not translated into action by the Federal
Reserve staff. The confirmation of Federal Reserve Governor
Michelle Bowman to serve as the Federal Reserve's Vice Chair
for Supervision, which is pending, may serve as a catalyst in this
regard.
Related Considerations for Banking Organizations
While supervisory expectations and processes relating to
crypto-asset-related activities are becoming clearer in certain
respects, banking organizations should be mindful of related
developments and regulatory considerations when contemplating
engagement in such activities.
Accounting Treatment. Effective January
30, 2025, the U.S. Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin 122 (SAB 122) and rescinded the guidance
provided in the heavily-criticized Staff Accounting Bulletin 121
(SAB 121), which was issued in March 2022.19 SAB 121
required banking organizations that are SEC filers, when engaged in
the provision of crypto-asset custody services on behalf of their
customers, to recognize an asset and a liability on their balance
sheets in respect of the underlying crypto-asset, reflecting both
the obligation to safeguard the crypto-asset held for the customer
and the fair value of the crypto-asset as of initial recognition
and each subsequent reporting date. The capital and liquidity
management implications of the SAB 121 requirement to recognize
customer crypto-assets on their balance sheets significantly
deterred banking organizations from providing crypto-asset custody
services. SAB 122 eliminates this requirement; however, banking
organizations that elect to provide such services must continue to
determine whether and to what extent to recognize a liability
relating to the risk of loss under an obligation to safeguard
customer crypto-assets.
Anti-"De-Banking" Measures.
Combatting the issue of "de-banking," including with
respect to crypto-asset firms and individuals engaged in the
crypto-asset sector, has emerged as a priority of the Trump
administration, many members of Congress, and the incoming
leadership of the OCC and FDIC. Acting FDIC Chairman Travis Hill
stated that regulators must work to end "de-banking" of
law-abiding customers.20 Acting Comptroller Rodney Hood
referred to the "de-banking" of customers on a categorial
basis as "repugnant and odious" and indicated that such
activity would not be tolerated under his leadership.21
Further, President Trump's nominee to serve as permanent
Comptroller, Jonathan Gould, stated during his confirmation hearing
before the Senate Banking Committee that he will "use the
OCC's full powers ... to shine a spotlight on
["de-banking" activities] and ensure that they are not
allowed within the banking system."22
In recent years, certain banking organizations have elected not to
engage in crypto-asset-related activities or, in some cases, in
banking relationships with certain crypto-asset firms, for reasons
including lack of clear legal authority and exposure to various
risks, including liquidity risk (the subject of a withdrawn
interagency statement, as referenced above) and reputational risk.
In addition to taking steps to address questions of legal authority
and certain financial risks, the OCC and the FDIC also have begun
to address the issue of reputational risk. For its part, the OCC
has declared that it will no longer examine national banks and
federal savings associations for reputation risk and has removed
references to reputation risk in the agency's examination
procedures and licensing and supervisory guidance.23 As
for the FDIC, Acting Chairman Hill has stated that the agency is
preparing a rulemaking that will eliminate the concept of
reputation risk from the FDIC's examinations.24
These actions are aimed principally at eliminating a potential
source of support for the "de-banking" of certain
customers, especially those from the crypto-asset sector.
While the emerging shift away from examining banking organizations
for reputation risk reasonably could be interpreted to suggest that
banking organizations will not be criticized and may even be
encouraged implicitly by their supervisors to provide banking
services to crypto-asset firms and market participants, the
agencies have indicated that they will not dictate whether specific
customers be onboarded or customer accounts be closed. Rather, the
agencies have expressed a continued expectation that such decisions
will be made based on the risk profiles of specific customers in
accordance with sound risk management practices and safe and sound
banking principles with a focus on maintaining a strong financial
condition and operational resiliency.
Compliance Management Expectations.
Despite the agencies' relaxation of supervisory processes
relating to crypto-asset-related activities, regulatory compliance
and risk management controls in certain areas continue to be
highlighted by agency leadership as critical to a banking
organization's safe and sound engagement in such
activities.25 In particular, compliance with the Bank
Secrecy Act (BSA) and applicable AML laws and regulations,
cybersecurity and fraud controls, and operational resiliency have
been cited as areas of focus in this regard. In the current
environment, banking organizations may be required to weigh the
agencies' expectations regarding fair access for all customers
against the risks that may be posed by certain individual
crypto-asset market actors, specifically including risks relating
to money laundering, illicit finance, and fraud.
Takeaways
The first few months of the Trump administration have been
favorable for the crypto-asset sector and for banking organizations
seeking to serve and engage with crypto-asset firms and customers.
The OCC and FDIC have already taken actions that make it easier for
national and state-chartered banks to engage in crypto
activities.
Nevertheless, the legal and regulatory landscape in this area is
expected to continue to evolve. In addition to the potential for
further rulemaking and supervisory action by the federal banking
agencies, other federal officials and regulatory agencies —
specifically including those included in the President's
Working Group on Digital Asset Markets, as assembled pursuant to
Executive Order 1417826 — are in the process of
assessing the current legal and regulatory framework for
crypto-assets, and Congress is actively considering various
legislative proposals addressing certain crypto-assets, such as
stablecoins, and crypto-asset market structure.27 We
will address legislative and regulatory developments regarding
stablecoins in a related set of Advisories.
In short, banking organizations seeking to enter the crypto-asset
arena, or expand their engagement in crypto-asset activities,
should continue to monitor regulatory and legislative developments
and tailor business and customer engagement strategies, compliance
management processes, and internal controls appropriately.
Footnotes
1 Travis Hill, Speech on Charting a New Course: Preliminary Thoughts on FDIC Policy Issues (Jan. 10, 2025).
2 Executive Order No. 14178, 90 Fed. Reg. 8647 (Jan. 23, 2025).
3 Office of the Comptroller of the Currency, OCC Letter Addressing Certain Crypto Asset Activities, Interpretive Letter 1183 (Mar. 7, 2025).
4 See, e.g., N.Y. Banking Law § 12-a (granting New York state chartered banking institutions the power to exercise the rights of counterpart federally chartered banking institutions).
5 Office of the Comptroller of the Currency, Authority of a National Bank to Provide Cryptocurrency Custody Services for Customers, Interpretive Letter 1170 (July 22, 2020).
6 Office of the Comptroller of the Currency, OCC Chief Counsel's Interpretation on National Bank and Federal Savings Association Authority to Hold Stablecoin Reserves, Interpretive Letter 1172 (Sep. 21, 2020).
7 Office of the Comptroller of the Currency, OCC Chief Counsel's Interpretation on National Bank and Federal Savings Association Authority to Use Independent Node Verification Networks and Stablecoins for Payment Activities, Interpretive Letter 1172 (Jan. 4, 2021).
8 Office of the Comptroller of the Currency, Chief Counsel's Interpretation Clarifying: (1) Authority of a Bank to Engage in Certain Cryptocurrency Activities and (2) Authority of the OCC to Charter a National Trust Bank, Interpretive Letter 1179 (Nov. 18, 2021) (Rescinded).
9 Federal Reserve Board of Governors, Addendum to Interagency Policy Statement on Funding and Liquidity Risk Management: Importance of Contingency Fundings Plans (July 28, 2023); Federal Deposit Insurance Corporation, Joint Statement on Crypto-Asset Risks to Banking Organizations (Jan. 3, 2023).
10 Federal Deposit Insurance Corporation, Joint Statement on Crypto-Asset Risks to Banking Organizations (Jan 3., 2023) (stating that "the agencies believe that issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralized network, or similar system is highly likely to be inconsistent with safe and sound banking practices. Further, the agencies have significant safety and soundness concerns with business models that are concentrated in crypto-asset-related activities or have concentrated exposures to the crypto-asset sector.").
11 Federal Deposit Insurance Corporation, FDIC Clarifies Process for Banks to Engage in Crypto-Related Activities, FIL-7-2025 (Mar. 28, 2025).
12 Federal Deposit Insurance Corporation, Notification of Engaging in Crypto-Related Activities, FIL-16-2022 (Apr. 7, 2022).
13 Board of Governors of the Federal Reserve System, Engagement in Crypto-Asset-Related Activities by Federal Reserve-Supervised Banking Organizations, SR 22-6 (Aug. 16, 2022).
14 Board of Governors of the Federal Reserve System, Supervisory Nonobjection Process for State Member Banks Seeking to Engage in Certain Activities Involving Dollar Tokens, SR 23-8 (Aug. 8, 2023).
15 Board of Governors of the Federal Reserve System, Novel Activities Supervision Program (July 31, 2024).
16 See, e.g., 12 U.S.C. § 330; 12 U.S.C. § 1831a; N.Y. Banking Law § 12-a.
17 12 C.F.R. § 208.3; 88 Fed. Reg. 7848, Policy Statement on Section 9(13) of the Federal Reserve Act (Feb. 7, 2023).
18 See, e.g., Kyle Campbell, Powell: Law-abiding crypto customers shouldn't lose accounts, American Banker (Jan 29, 2025).
19 90 Fed. Reg. 8492, Staff Accounting Bulletin No. 122 (Jan. 30, 2025).
20 Travis Hill, Speech on Charting a New Course: Preliminary Thoughts on FDIC Policy Issues (Jan. 10, 2025).
21 Jon Hill, OCC's Hood Says He Won't Tolerate 'Odious' Debanking, Law360 (Mar. 18, 2025).
22 Nomination of Mr. Jonathan to serve as Comptroller of the Currency: Hearing Before the Senate Committee on Banking, Housing, and Urban Affairs (Mar. 27, 2024) (statement of Jonathan Gould).
23 Office of the Comptroller of the Currency, Bank Supervision: Removing References to Reputational Risk, OCC Bulletin 2025-4 (Mar. 20, 2025).
24 Travis Hill, Speech on View from the FDIC: Update on Key Policy Issues (Apr. 8, 2025).
25 Rodney Hood, Speech at CBA Live: A Conversation With Acting Comptroller Rodney E. Hood (Mar. 18, 2025).
26 Executive Order No. 14178, 90 Fed. Reg. 8647 (Jan. 23, 2025).
27 See, e.g., STABLE Act of 2025, H.R. 2392, 119th Cong. (2025); GENIUS Act of 2025, S. 394, 119th Cong. (2025).
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