OCC Empowers Banks to Buy, Sell Customer Crypto Assets

The OCC has announced that national banks can buy and sell their customers’ crypto assets. Banks can also outsource crypto activities to third parties, indicating a regulatory shift. This change loosens previous restrictions requiring banks to seek approval before engaging with cryptocurrencies.

In a significant development, the U.S. Office of the Comptroller of the Currency (OCC) has announced that national banks can now buy and sell cryptocurrency assets held in custody for their customers. This move, highlighted by a directive issued on Wednesday, marks a notable shift in the regulatory stance towards integrating cryptocurrencies within traditional banking systems.

The OCC’s new policy not only permits these financial institutions to engage in crypto transactions but also allows them to outsource custody and execution services to external parties. This delegation aims to facilitate better operational efficiency while still adhering to the regulatory framework’s safety and soundness requirements.

Previously, national banks were required to seek prior approval from the regulator before delving into cryptocurrency activities. However, the OCC’s recent interpretive letters reflect a growing acceptance and integration of crypto services into the banking sector. This change aligns with earlier guidance issued by the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve, symbolizing a broader regulatory shift.

Legal expert Katherine Kirkpatrick Bos noted on social media that this represents a merging of crypto into traditional banking. She remarked that the new guidance allowing third-party services opens up opportunities for regulated crypto-native service providers, essentially broadening the landscape for banking operations involving digital assets.

Furthermore, the OCC’s latest directive is seen as a direct response to its earlier hesitance regarding cryptocurrencies, suggesting a more innovative and adaptive regulatory environment. This update comes following a previous change in March, which lifted restrictions on banks needing supervisory approvals for new crypto ventures.

In summary, banks are now empowered to navigate the crypto landscape more freely, engaging in custody, buying, and selling of assets without the earlier restrictions. The ongoing evolution of regulatory policies not only creates new avenues for financial institutions but also indicates a significant shift towards accommodating and regulating digital currencies within the mainstream banking framework.