On December ninth, the Workplace of the Comptroller of the Foreign money issued a press launch with a really direct message to U.S. banks that it’s acceptable to take a seat in the midst of crypto transactions.
Within the unforgettably titled Information Launch 2025-121, the OCC issued the in some way even worse title Interpretation Letter 1188, confirming that nationwide banks could conduct “risk-free principal” crypto asset transactions as a part of their banking operations, performing as patrons to 1 buyer and sellers to a different, with out holding any significant stock of the tokens themselves.
The day earlier than, Comptroller Jonathan Gould stood in entrance of a room filled with business gamers and made a distinct, however intently associated level.
He mentioned he noticed no purpose to deal with digital belongings as a separate species with regards to custody and custody, and dismissed lobbying efforts from the Banking Coverage Institute, which known as on the institute to dam a variety of crypto corporations from acquiring Nationwide Belief Constitution standing.
BPI’s marketing campaign, described in an October assertion titled “BPI Urges OCC to Protect the Integrity of the Nationwide Belief Constitution,” argues that candidates similar to massive exchanges, stablecoin issuers, and fintech platforms wish to use the belief constitution as a backdoor to bank-like actions with out shouldering the total burden of deposit insurance coverage and holding firm oversight.
Taken collectively, the interpretation letter and Mr. Gould’s feedback present a transparent route for the way forward for the business. The OCC is just not making an attempt to chop off cryptocurrencies from the banking system, however moderately to determine which components of their actions fall into well-known classes similar to intermediation, custodianship, and fiduciary providers, and beneath what circumstances.
U.S. banks now have the tangible peace of thoughts of with the ability to match their clients’ crypto transactions on a risk-free principal foundation, and crypto corporations perceive that the door to the Nationwide Belief Constitution is just not closed simply because belongings transfer on a blockchain moderately than a conventional custodian.
Who really runs this a part of the banking system?
For these outdoors the USA, the alphabet soup of banking regulators can really feel like an elaborate puzzle, so it is value beginning with the fundamentals.
The Workplace of the Comptroller of the Foreign money (OCC) is an unbiased company throughout the U.S. Treasury that licenses, regulates, and supervises nationwide banks, federal financial savings associations, and federal branches and brokers of overseas banks.
The corporate depends on assessments and costs from the banks it oversees, moderately than on annual Congressional appropriations, and is considerably proof against short-term political battles over funding. Its mission spans security, honest entry to monetary providers, and compliance with banking legal guidelines.
The Workplace of the Comptroller of the Foreign money sits on the apex of this construction. Mr. Gould, who was sworn on this summer time, serves not solely as chief govt officer of the OCC but additionally as a member of our bodies such because the Federal Deposit Insurance coverage Company Board of Governors and the Monetary Stability Oversight Council, which means his views prolong to broader discussions about monetary stability and market plumbing.
However his central authority may be very particular: he heads the company that grants nationwide financial institution charters.
A financial institution constitution on this context is basically a enterprise license that enables an establishment to function as a financial institution or a intently associated entity beneath federal regulation. On the federal degree, the OCC administers these licenses. On the state degree, particular person regulators problem their very own variations.
OCC’s Constitution Licensing Guide completely particulars the method from preliminary software to last approval. Organizers should exhibit that their proposed financial institution has adequate capital, a dependable administration workforce, a marketing strategy that may stand up to stress, and threat administration that covers all the pieces from primary credit score threat to operational and cyber dangers.
New digital-only banks are anticipated to satisfy comparable requirements, with elevated scrutiny of know-how and third-party suppliers.
Inside that world, nationwide belief banks occupy a slim however essential area of interest. Federal regulation permits the OCC to determine a nationwide financial institution whose actions are restricted to belief firm and associated providers, sometimes targeted on serving as a trustee, executor, funding supervisor, or custodian of belongings.
These entities sometimes don’t settle for deposits within the regular retail sense and are sometimes not FDIC insured. Due to this construction, many Nationwide Belief banks don’t meet the definition of a “financial institution” beneath the Financial institution Holding Firm Act, permitting their mother or father corporations to keep away from the total burden of supervising consolidated holding corporations.
This authorized design explains why belief charters have turn out to be the main focus of tug-of-war. For crypto corporations that wish to maintain buyer tokens, handle stablecoin reserves, or sit on the middle of fee flows with out changing into absolutely business banks, the Nationwide Belief Constitution presents three issues without delay: federal oversight, nationwide attain, and a attainable path to staying outdoors of holding firm guidelines.
For conventional banks and their commerce associations, this seems to be an uneven taking part in discipline, particularly when new entrants can course of massive volumes of funds and reserves with narrower licenses.
BPI’s letter to the OCC particulars this very concern, warning that belief charters have traditionally focused establishments “primarily engaged in belief and fiduciary actions.” On the identical time, some digital asset candidates are looking for to function broader funds and preparation companies.
Gould has mentioned publicly that know-how shouldn’t be the dividing line. He appears to be like again at a long time of digital storage and book-entry securities. He asks why holding crypto debt on a distributed ledger ought to be handled as alien to banking.
The identical logic underlies Interpretive Letter 1188, which argues, based mostly on prior case regulation and OCC opinions, that risk-free principal buying and selling of crypto belongings is functionally equal to permitted middleman actions and is a logical extension of current crypto custody providers.
What this implies for crypto custody and buying and selling
The brand new letter does one thing very quick for U.S. monetary establishments. It tells nationwide banks that they will stand in the midst of their clients’ crypto transactions so long as they construction the transactions as identity-matched transactions and handle threat with the identical care they apply to securities.
Banks should buy digital belongings from one buyer and instantly promote them to a different buyer, reserving two offsetting positions that go away no web publicity past settlement and operational threat.
For tokens that depend as securities, that is based mostly on the well-worn foundation of Article 24 of the Nationwide Banking Act. For different crypto belongings, the letter additionally conducts a four-factor check and concludes that the exercise nonetheless falls beneath “banking actions.”
For main banks, which have historically stored cryptocurrencies separate, this represents an actual opening. This implies we will construct a cryptocurrency brokerage and routing service for our clients that minimizes steadiness sheet threat, moderately than dabbling with loosely related associates or leaving this discipline to exchanges completely.
This additionally builds on a earlier OCC letter that already outlined how banks maintain stablecoin reserves and supply primary custody providers for cryptocurrencies.
On the constitution entrance, Gould’s refusal to provide BPI the sweeping solutions it needed might be much more essential for the form of the market within the coming years. The OCC’s Formation Guide reminds candidates that even limited-purpose belief banks should meet the identical core requirements of capital, administration, threat administration, and neighborhood wants as full nationwide banks.
If the company begins approving digital asset corporations that meet these exams, the core of U.S. cryptocurrency custody and settlement may shift to a nationwide belief financial institution with OCC oversight at its masthead.
For exchanges, this creates a path to providing institutional shoppers a vertically built-in stack, with buying and selling, fiat funds, and on-chain custody all housed inside a federally supervised entity.
For stablecoin issuers, nationwide belief banks can maintain reserves on OCC-regulated steadiness sheets and run fee flows by means of a Fed-connected correspondent community, even when the issuer itself is outdoors of the total banking framework.
For prime brokers and asset managers, the phrase “OCC-supervised nationwide belief financial institution” on a due diligence guidelines appears to be like very completely different from “state-chartered belief firm” or “non-U.S. custodian,” particularly when U.S. securities guidelines require “certified custodians” of digital belongings, much like shares and bonds.
The opposite facet of the coin is that belief charters should not straightforward to succeed.
BPI and different commentators have been busy filling detailed objections into OCC paperwork towards particular candidates, arguing that some crypto platforms have weak client safety data, inconsistent enterprise fashions, and opaque possession buildings unsuitable for bank-level oversight.
Underneath its constitution, the OCC has broad discretion to weigh administration high quality, monetary energy and neighborhood advantages, and may connect customized capital and liquidity circumstances to belief financial institution approvals. So the true filter for crypto corporations lies not simply in headline speeches, however in evaluation groups and oversight agreements.
Globally, the route set in Washington tends to unfold outward. Massive banks with operations throughout a number of continents usually look to U.S. guidelines when deciding the place and construct new traces of enterprise, and overseas regulators hold an in depth eye on the OCC as a result of its selections form the world’s largest steadiness sheets.
If U.S. nationwide banks start providing risk-free principal routing for Bitcoin and Ethereum beneath clear OCC steerage, it is going to affect how these providers are anticipated by world clients in London, Frankfurt, and Singapore.
If a small variety of crypto corporations had been to safe a Nationwide Belief Constitution and function large-scale custody and stablecoin operations beneath federal oversight, it might be a really completely different mannequin from the method of offshore exchanges and native fee companions that has outlined a lot of the previous decade.
The message to the cryptocurrency business right here is just not that the US banking system has thrown its doorways vast open.
As a substitute, main nationwide financial institution regulators are starting to lock components of the crypto enterprise into particular regulatory hooks. brokerage-like buying and selling as a risk-free principal, custody as a contemporary type of safekeeping, and a belief constitution as a house for fiduciary and preparatory actions.
In a market the place regulatory uncertainty is a key enterprise threat, such gradual line-by-line clarification will be as essential as flashy new laws.
Cryptocurrency corporations trying to present funding to U.S. institutional traders now have a clearer image of what they should do. Banks trying to transfer past white-label merchandise can be taught the place their very own regulators intend to attract the road.
How shortly either side can get by means of that opening will decide whether or not OCC Letter 1188 and Mr. Gould’s speech mark the start of a brand new period in bank-run cryptocurrency plumbing, or simply one other transient entry in an extended historical past of regulators testing whether or not digital belongings match inside current guidelines.
