OCC Authorizes National Banks to Hold Cryptocurrency
In a significant move within the Treasury Department, the Office of the Comptroller of the Currency (OCC) has authorized national banks to hold and utilize cryptocurrency under specific conditions. This ruling, detailed in an interpretive letter published on Tuesday, allows major banking institutions to maintain digital assets on their balance sheets for the purpose of paying network fees linked to blockchain transactions tied to permissible banking activities.
Flexibility for Banks
Additionally, it provides the flexibility for banks to manage digital currencies while testing platforms related to cryptocurrency, expanding their operational capabilities. Adam Cohen, the OCC’s senior deputy comptroller and chief counsel, articulated the rationale behind this policy, suggesting that it allows banks to broaden their existing permissible activities without incurring additional costs or exposing themselves to the risks associated with obtaining cryptocurrencies from third-party sources.
Historical Context and Regulatory Shift
Historically, the approach towards cryptocurrency by the OCC and other banking regulators like the FDIC was markedly conservative, especially under the Biden administration. This earlier stance mandated that national banks must seek OCC approval before engaging in most cryptocurrency-related activities. Regulators highlighted potential risks, particularly regarding open blockchain networks such as Ethereum, which allow unrestricted and unmanageable transactions.
However, the attitude towards crypto regulation has shifted notably since then, propelled by efforts from the Trump administration earlier this year, which aimed to roll back restrictions on cryptocurrency operations. Following this, the OCC repealed the prior requirement for national banks to obtain regulatory approval before participating in crypto activities and sanctioned the custody of cryptocurrency assets for clients, in addition to certain operations involving stablecoins.
Conclusion
The latest announcement represents a further advancement in this evolving regulatory landscape, explicitly permitting national banks to incorporate cryptocurrencies into their balance sheets for various applications. This change signifies a noteworthy step towards integrating traditional banking services with blockchain technology, potentially deepening their engagement within the cryptocurrency sector.
