Crypto Firms Pursue Banking Licenses as U.S. Regulators Ease Restrictions

Over 15 cryptocurrency firms are applying for banking licenses amid eased regulatory restrictions by U.S. regulators. The OCC is more open to applications due to a shift under the Trump administration, enabling integration with traditional banking. An OCC letter permits specific crypto activities, and the FDIC has also relaxed policies for banks engaging in crypto if risk controls are in place. Federal Reserve Chair Powell suggests a softening of previous guidance on crypto assets, observing sector growth.

Over 15 cryptocurrency firms are actively seeking banking licenses as U.S. regulators lower restrictions, providing these companies direct access to federal payment systems and enhancing their legitimacy. This significant move comes with the Office of the Comptroller of the Currency (OCC) now being more receptive to such applications, following a shift in regulatory stance under the Trump administration.

Applications for banking licenses are being submitted to the OCC by over 15 crypto and fintech companies, including prominent names like Circle and Bitgo. The OCC, which regulates approximately 1,000 national banks and federal savings associations, has encouraged these firms to explore deeper integration within the traditional banking framework, especially as trust charters may lead to access to the Federal Reserve’s master accounts.

The surge in applications followed an Interpretive Letter from the OCC in March, which allowed national banks and federal savings associations to undertake specified cryptocurrency activities. The letter clarified that services such as crypto custody, stablecoin functions, and operations using distributed ledger technology are permissible. Acting Comptroller Rodney E. Hood emphasised that banks must apply the same risk management measures to these new activities as they do with traditional banking operations.

Additionally, the Federal Deposit Insurance Corporation (FDIC) has adapted to this regulatory softening. A recent policy update allows FDIC-supervised banks to engage in cryptocurrency activities without needing prior approval, as long as they maintain effective risk management protocols. Acting Chairman Travis Hill remarked on the shift from prior conservative approaches to support the crypto sector.

Furthermore, Jerome Powell, Chair of the Federal Reserve, has indicated a willingness to adopt a more relaxed regulatory framework for crypto assets. He acknowledged past conservative approaches but expressed optimism about loosening regulations, recognising the sector’s increasing maturity and its movement towards mainstream acceptance.

This evolving regulatory landscape signifies a critical moment for the integration of cryptocurrencies within the traditional banking system, as more companies look to leverage emerging opportunities.