U.S. Banks Now Legally Allowed to Hold and Use Ethereum for Blockchain Operations

The Office of the Comptroller of the Currency (OCC) issued Interpretive Letter 1186 on November 18, 2025, marking a pivotal regulatory shift that permits U.S. national banks to hold and use Ethereum (ETH) for blockchain operations such as paying gas fees and testing blockchain platforms according to the OCC's guidance. This development addresses a critical operational bottleneck for banks seeking to integrate digital assets into their services, enabling them to manage on-chain activities directly rather than relying on intermediaries according to the OCC's guidance. The implications of this guidance extend beyond procedural efficiency, signaling a broader institutional embrace of Ethereum and reshaping its network value dynamics.

Strategic Implications for Institutional Ethereum Demand

The OCC's clarification removes a key barrier to institutional adoption by allowing banks to hold ETH as a functional asset rather than a speculative one. Prior to this, banks faced ambiguity about whether holding tokens like ETH for operational purposes-such as facilitating transactions or validating blocks-was permissible under existing regulations according to the OCC's guidance. By codifying this authority, the OCC has created a legal framework that encourages banks to build and test Ethereum-based infrastructure, including custody solutions, validator nodes, and payment systems as Jones Day notes.

This regulatory clarity aligns with a broader trend of institutional interest in Ethereum. For instance, the approval of Ethereum ETFs in July 2024 catalyzed over $12 billion in inflows by August 2025, with institutional ownership now accounting for approximately 2.5% of the total circulating supply according to market data. The OCC's guidance further reinforces this momentum by reducing compliance risks for banks, which are often hesitant to engage with crypto due to regulatory uncertainty. As noted by Jones Day, the ability to hold ETH for operational purposes "improves efficiency, reduces operational risk, and enables banks to serve as validator nodes or custody providers" according to Jones Day.

Moreover, Ethereum's staking infrastructure has matured into a robust ecosystem, with 29% of the total supply staked by Q2 2025 according to market data. Staking yields averaging 4-6% annually provide a dual-income model-capital appreciation and yield-that mirrors traditional asset classes like dividend-paying equities or bonds. This dual utility makes Ethereum particularly appealing to risk-averse institutional investors, who can now leverage the asset for both operational efficiency and financial returns according to market analysis.

Network Value Capture and Long-Term Growth

The OCC's guidance directly enhances Ethereum's network value by expanding its utility within traditional financial systems. By enabling banks to hold ETH for gas fees and testing, the regulation increases demand for the token in practical, non-speculative contexts. This demand is further amplified by Ethereum's role in decentralized finance (DeFi) and smart contracts, which generate consistent transaction fees and reinforce its strategic value according to market analysis.

Quantifiable metrics underscore this trend. Post-2025, Ethereum ETFs have outperformed the S&P 500 during market corrections, demonstrating the asset's resilience and institutional confidence according to market data. Additionally, Japan's Financial Services Agency (FSA) classified Bitcoin and Ethereum as financial instruments under the same regulatory framework as stocks and bonds, further legitimizing their role in global finance according to regulatory reports. These developments collectively create a flywheel effect: increased institutional demand drives price appreciation, which in turn attracts more institutional interest.

Conclusion

The OCC's November 2025 guidance represents a watershed moment for Ethereum's integration into mainstream finance. By granting banks the authority to hold and use ETH for operational purposes, the regulation reduces friction in digital asset adoption and aligns Ethereum with traditional financial infrastructure. This shift not only boosts institutional demand but also strengthens Ethereum's network value through increased utility, staking participation, and regulatory legitimacy. As banks begin to operationalize these permissions-potentially through custody solutions, validator services, or blockchain-based payment systems-the long-term trajectory for Ethereum appears increasingly aligned with institutional capital flows.