The US banking regulator, the Office of the Comptroller of the Currency (OCC), has announced a major change that makes it easier for banks to offer cryptocurrency services.
In a new decision, the OCC has removed the requirement for national banks and federal savings associations to get prior approval before providing custody services for digital assets, including cryptocurrencies and stablecoins.
This change, outlined in Interpretive Letter 1183, is considered a significant step in making cryptocurrency more accessible within the traditional banking system.
Many industry experts see this as a major shift in how financial institutions interact with digital assets, while others warn that challenges still remain.
OCC’s new decision: What has changed?
The OCC’s announcement means that national banks and federal savings associations no longer need to go through an approval process before offering crypto custody services.
This applies to services related to digital asset storage, stablecoins, and even participation in blockchain networks.
Previously, under guidelines set during President Joe Biden’s administration, banks had to clear any crypto-related activities with regulators beforehand.
They were required to show that they had risk management systems in place and wait for supervisory approval. This additional layer of regulation often discouraged banks from exploring cryptocurrency-related business opportunities.
With the new decision, banks can now directly engage with digital assets without seeking approval first. However, the OCC has made it clear that financial institutions must still follow strong risk management practices.
Acting Comptroller of the Currency, Rodney E. Hood, explained the decision, stating, “The OCC expects banks to maintain the same strong risk management controls to support new banking activities, just as they do for traditional ones”.
The OCC has also withdrawn several past statements that had discouraged banks from dealing with cryptocurrencies. In 2023, US regulators issued a joint warning about the risks of digital assets, saying the sector was highly volatile.
While those warnings did not ban banks from working with crypto, they made financial institutions cautious. With the new OCC guidance, banks now have more freedom to explore digital assets without fear of additional restrictions.
Reactions from the crypto industry
The decision has sparked mixed reactions across the crypto and banking industries. Some see it as a positive step forward, while others remain cautious.
The CEO of Coinbase, Brian Armstrong, has long been an advocate for removing restrictions on banks dealing with digital assets. Recently, he sued the FDIC (Federal Deposit Insurance Corporation), accusing it of trying to cut off banking services for crypto companies.
The OCC’s decision is seen as a victory for those who have been pushing for better integration between banks and digital assets.
However, some industry experts warn that the battle isn’t over. While the OCC has relaxed its rules, the Federal Reserve (Fed) and the FDIC still maintain strict guidelines on digital assets. This means that banks may still face regulatory challenges when offering crypto services.
One of the leading voices on this issue is the CEO of Custodia Bank, Caitlin Long. She believes the OCC’s move is a step in the right direction but warns that other regulators still present obstacles.
“The Fed and FDIC’s anti-crypto guidelines remain in effect, creating barriers for banks that want to fully embrace digital asset services”, she said.
The OCC’s decision also comes at a time when the White House is showing a renewed interest in cryptocurrency.
On the same day that the OCC made its announcement, President Donald Trump signed an executive order establishing a Strategic Reserve for Bitcoin and other cryptocurrencies.
This suggests that the administration is open to policies that support the growth of the digital asset sector.
Bitcoin adoption and future challenges
According to a recent report from Bitcoin financial services firm River, about 14% of Americans own Bitcoin, making the US one of the top countries for crypto ownership. However, global adoption is still in its early stages.
River’s analysis estimates that Bitcoin has only reached 3% of its full potential global adoption. This figure is based on factors such as corporate holdings, institutional participation, and government allocations.
In contrast, Africa has the lowest Bitcoin adoption rate, with just 1.6% of the population holding $BTC.
While Bitcoin and other cryptocurrencies continue to gain recognition, there are still several challenges preventing wider adoption.
One of the biggest issues is lack of financial and technical literacy. Many people still misunderstand Bitcoin, with some believing it is a scam or a Ponzi scheme.
Another challenge is regulatory uncertainty. While the OCC’s decision is a positive step, the fact that the Fed and FDIC have not changed their guidelines creates uncertainty for banks. Without clearer regulations, some financial institutions may hesitate to fully embrace digital assets.
There has also been discussion around potential taxation of crypto transactions. During a recent episode of the All In podcast, host Jason Calacanis suggested introducing a 0.01% tax on every crypto transaction to help fund the US strategic Bitcoin reserve.
However, White House advisor on cryptocurrency and AI, David Sacks, rejected the idea, saying, “That’s always how taxes start. They are described as being very modest. You know, when the income tax started, it only applied to like a thousand Americans, and the legislators swore up and down that it would never be applied to middle-class people”.
The White House Cryptocurrency Summit did not provide further details on specific tax policies, but the Trump administration has expressed support for broad tax reforms at the federal level.
What’s next for crypto in banking?
The OCC’s decision to remove prior approval requirements for banks engaging in cryptocurrency services marks a major shift in the US financial system.
By allowing national banks and federal savings associations to offer crypto custody services without additional regulatory hurdles, the OCC has opened the door for greater crypto adoption in traditional banking.
However, the road ahead is still uncertain. Other regulators, such as the Federal Reserve and the FDIC, have yet to update their guidelines, meaning banks could still face obstacles in fully embracing digital assets.
Additionally, while Bitcoin adoption continues to grow, it remains far from reaching its full potential. Education, regulatory clarity, and financial infrastructure improvements will all play a key role in shaping the future of cryptocurrency in the US and beyond.
For now, the OCC’s move is seen as a significant step forward in bridging the gap between traditional banking and the world of digital assets.
As the industry evolves, banks, regulators, and crypto businesses will need to navigate this new landscape carefully to ensure continued growth and innovation.
