OCC Eases Some Restrictions on Bank Digital Asset Activities
In Short
The Situation: In recent years, U.S. federal bank regulators significantly limited banks' authority to engage in crypto-asset activities, including participating in public blockchains, owning digital assets as principal, and even providing traditional banking services to digital asset companies.
The Change: In the recent Interpretative Letter 1183, the Office of the Comptroller of the Currency (the "OCC") signaled increased support for crypto assets by rescinding some prior limitations to banks' crypto-asset activities and by withdrawing participation in restrictive joint statements made previously with other federal bank regulators.
Looking Ahead: The OCC's pivot could encourage more crypto-asset activities by national banks, and create inconsistencies with federal regulation of crypto activities of state-chartered banks. On the other hand, other federal bank regulators may follow the OCC's lead and ease prior crypto-related restrictions.
On March 7, 2025, the OCC issued Interpretive Letter 1183, which rescinded the Biden-era OCC Interpretive Letter 1179 and withdrew the OCC from participation in two joint statements issued with the Federal Reserve and the FDIC: (i) the "Joint Statement on Crypto-Asset Risks to Banking Organizations," issued on January 3, 2023 ("Risks Joint Statement"); and (ii) the "Joint Statement on Liquidity Risks to Banking Organizations Resulting from Crypto-Asset Market Vulnerabilities," issued on February 23, 2023 ("Liquidity Joint Statement"). Interpretive Letter 1183 may signal a significant change for bank regulation regarding crypto assets.
OCC Interpretive Letter 1179 Rescinded
Previously, the OCC required banks to seek and receive "supervisory non-objection" before engaging in specified permissible crypto activities: (i) digital asset custody; (ii) holding dollar "reserves" that back stablecoins; and (iii) validating, storing, and recording payment transactions by serving as a node on a distributed ledger.
The OCC permitted each of these activities prior to Interpretive Letter 1179, and each has technically remained permissible since. But Interpretive Letter 1179 established a supervisory hurdle that slowed—and in many cases stopped entirely—the ability of national banks to conduct these activities.
By rescinding Interpretive Letter 1179, the OCC now signals a more flexible approach to national bank digital asset activities.
Status of the Risks Joint Statement
Originally issued by the OCC, Federal Reserve, and FDIC, the Risks Joint Statement flagged several crypto-asset risks and limited the ability of banks to engage in digital asset activities, including many activities on public blockchains. To that point, the Risks Joint Statement provides 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." In the language of bank regulators, this statement is tantamount to a prohibition without using the word.
Additionally, the Risks Joint Statement cautions banks even with respect to providing traditional banking services to digital asset companies, if the bank's business model becomes too concentrated in, or too exposed to, the digital asset industry.
The restriction on activities involving digital assets on public blockchains has significantly limited bank entry into digital asset projects generally; some banks have even built infrastructure on private blockchains (which have major commercial limitations).
As of March 7, 2025, the OCC no longer applies this guidance to entities it charters and supervises, including national banks and federal savings associations. The Federal Reserve and FDIC have not announced their withdrawals from the joint statement—or at least have not yet—so the Risks Joint Statement remains in effect for state-chartered banks, which the two agencies supervise and regulate at the federal level. But the OCC's withdrawal has weakened the unified impact of the Risks Joint Statement on the U.S. banking system in general.
Status of the Liquidity Joint Statement
The Liquidity Joint Statement raises the agencies' concerns surrounding liquidity risk arising from "sources of funding from crypto-asset-related entities." Examples include deposits that constitute stablecoin-related reserves and deposits from digital asset firms that are placed on behalf of, and for the benefit of, end-user customers of the digital asset firm. The OCC's withdrawal from this joint statement also undercuts the consistency of regulation across federal bank regulators.
Implications
The OCC's pivot suggests a softening stance, potentially opening doors for national banks to explore legally permissible crypto services—such as custody or specified stablecoin operations—more freely, provided they maintain robust risk management. However, state-chartered banks still face cautions from the FDIC and Federal Reserve in both joint statements, including restrictions on public blockchain use and restrictions on bank business models concentrated in or exposed to the digital asset industry, through deposits or otherwise.
This split between national banks and state-chartered banks, if it prevails, could create uneven opportunities across the banking sector. However, in the context of the new administration, which has taken a generally positive policy stance toward digital assets (including issuing an executive order for the United States to build a strategic reserve of digital assets), the Federal Reserve and the FDIC may take concrete steps to move in a similarly favorable direction in the short to medium term.
Two Key Takeaways
- The OCC, currently headed by a new acting Comptroller, has eased restrictions for banks under the new administration. Interpretative Letter 1183 rescinds the OCC's Biden-era guidance requiring supervisory non-objection before engaging in crypto-asset activities, and withdrew the OCC from guidance that strongly cautioned banks regarding the safety and soundness of many crypto-asset activities.
- The change in the OCC's stance on crypto regulation for banks could lead to inconsistent treatment of digital assets at banks (at least temporarily), or signal a broader shift in policy across the bank regulators.
