OCC reaffirms banks’ authority to offer crypto services without prior approval

The Office of the Comptroller of the Currency (OCC) clarified connected May 7 that federally chartered banks and savings associations whitethorn connection crypto services, namely custody and execution, including done third-party providers, provided they adhere to dependable hazard absorption practices and ineligible compliance. 

The clarification, issued done Interpretive Letter 1184, confirms and expands connected earlier guidance related to crypto activities.

The OCC stated that institutions whitethorn bargain and merchantability assets held successful custody astatine the customer’s absorption and outsource crypto-asset functions, including custody and commercialized execution services, to 3rd parties. 

These activities stay taxable to the aforesaid oversight and operational standards applied to accepted fiscal services, including owed diligence, third-party hazard management, and cybersecurity protocols.

The missive builds connected anterior OCC guidance outlined successful Interpretive Letters 1170 and 1183. It besides reinforces the regulator’s presumption that integer plus services tin autumn wrong the scope of permissible banking activities erstwhile conducted safely and successful compliance with applicable regulations.

Regulatory discourse and argumentation shift

The clarification follows a argumentation change first announced by the OCC connected March 7, which removed the request for anterior regulatory support for definite crypto-related activities.

That earlier announcement departed from erstwhile supervisory practices nether erstwhile President Joe Biden’s administration, erstwhile banks needed to notify examiners and person a missive of nary objection earlier engaging successful crypto services.

In its March update, the OCC confirmed that nationalist banks whitethorn prosecute successful crypto-asset custody and stablecoin activities and adjacent enactment arsenic validators connected distributed ledger networks. 

The updated guidance efficaciously reversed erstwhile cautionary statements and removed procedural hurdles, allowing banks to incorporated crypto services into their operations without seeking beforehand approval.

At the time, acting comptroller of the currency Rodney Hood said the OCC aimed to streamline oversight portion maintaining precocious information standards. 

Reinforcing permission

The May 7 missive builds connected that argumentation foundation, formally integrating execution services and sub-custodian relationships into the scope of authorized activity.

The OCC reiterated that institutions indispensable negociate associated risks, whether they grip crypto services internally oregon done 3rd parties.

Interpretive Letter 1184 reaffirms the support to federally regulated banks to prosecute with integer assets successful a custodial capacity, provided these activities are executed with due safeguards and successful compliance with national banking law. 

The OCC’s updated presumption affirms crypto services arsenic permissible nether existing authorities and signals continued regulatory normalization of integer plus services wrong the US banking sector.

The station OCC reaffirms banks’ authorization to connection crypto services without anterior approval appeared archetypal connected CryptoSlate.