Ethereum News Today: OCC Bridges Gap Between Banks and Blockchain

The U.S. Office of the Comptroller of the Currency (OCC) has reversed years of restrictive policy, now allowing national banks to hold cryptocurrency on their balance sheets for specific operational purposes, including paying blockchain network fees and testing crypto-related platforms. This marks the most significant regulatory shift in bank-crypto relations since 2020, signaling a pivot toward integrating digital assets into traditional finance. The new guidance, outlined in Interpretive Letter 1186, permits banks to retain crypto assets as principal when necessary to facilitate permissible activities, such as settling transactions on distributed ledgers or operating blockchain-based services.

The decision addresses a critical bottleneck for banks seeking to engage with blockchain technology. Previously, institutions had to rely on third parties to acquire small amounts of crypto for gas fees-costs required to execute transactions on public networks like Ethereum. By enabling banks to hold and use digital assets directly, the OCC aims to reduce operational risks and streamline on-chain operations. Adam Cohen, the OCC's senior deputy comptroller, emphasized that the change allows banks to "expand pre-existing permissible activities without exposing themselves to counterparty risks" according to OCC officials.

The OCC's guidance explicitly permits banks to hold crypto for testing purposes, whether for internally developed systems or third-party platforms. This expands the scope of permissible activities beyond custody and execution, creating a foundation for broader blockchain adoption in banking. For instance, institutions can now maintain Ethereum (ETH) reserves to facilitate customer transactions or validate smart contracts. The agency stressed that these activities must be conducted "in a safe and sound manner and in compliance with applicable law" as required by OCC regulations.

The policy change also reflects broader efforts to modernize financial infrastructure. Alongside the Federal Reserve and FDIC, the OCC is working on regulations for stablecoins under the GENIUS Act, though final rules remain pending. Meanwhile, crypto firms like Crypto.com and Coinbase have applied for federal charters to offer custody services, signaling growing institutional confidence in the sector.

Critics, however, caution that the rapid integration of crypto into banking could introduce new risks, particularly around volatility and illicit finance. The Basel Committee on Banking Supervision has separately called for revised capital requirements to address crypto's unique risks, as current rules-rejected by the U.S. and U.K.-are seen as overly punitive.

As banks prepare to navigate this evolving landscape, the OCC's decision underscores a strategic shift toward embracing digital assets as a core component of financial innovation. With major institutions now cleared to hold and utilize crypto, the stage is set for a deeper convergence of traditional banking and blockchain technology.