OCC Allows Banks To Offer Crypto Custody Services

The U.S. Office of the Comptroller of the Currency (OCC) has issued an official interpretive letter confirming that federal savings institutions and national banks are permitted to provide cryptocurrency custody services and execute trades for individuals. This regulatory confirmation is a significant development, as it allows banks to expand their digital asset offerings, either directly or through approved third-party suppliers.

In Interpretive Letter #1184, the OCC clarified that banks under federal jurisdiction can offer crypto-related services traditionally reserved for digital asset firms. These services include the execution of buy and sell orders and the custody of cryptocurrencies, but only when acting on direct instructions from the consumer. This affirmation builds on previous guidance, particularly Interpretive Letters 1170 and 1183, which had already covered the broader scope of crypto custody. The OCC emphasized that providing custody for crypto assets is a contemporary equivalent of conventional custodial banking services.

The letter also highlighted that banks can function in either a fiduciary or non-fiduciary capacity, depending on their relationship with the consumer. Additionally, bank crypto custody is recognized as falling under allowable banking activities under current U.S. law. This clarification is crucial as it provides a legal framework for banks to engage in the cryptocurrency market.

Banks are also permitted to delegate execution services and crypto custody to third-party sub-custodians, particularly for organizations lacking in-house cryptocurrency infrastructure. However, this delegation comes with conditions. Banks must maintain oversight and ensure that any third-party or sub-custodian has adequate internal controls. They must also follow established third-party risk management practices, especially those designed to protect client assets. Banks must continue to meet existing regulatory obligations under parts 9 or 150 of Title 12 of the Code of Federal Regulations when acting in a fiduciary capacity.

Under the OCC’s interpretation, the list of permissible crypto services extends beyond simple asset storage. Banks are now permitted to offer trade execution services, fiat-to-crypto and crypto-to-fiat exchange facilitation, transaction settlement, and recordkeeping, valuation, tax, and reporting services. The OCC views these services as an extension of a bank’s traditional custodial role, adapted to the evolving needs of digital finance. This decision is aligned with a broader legal perspective, supported by precedent such as M & M Leasing Corp. v. Seattle First Nat. Bank, where the court acknowledged that banking powers must adapt to technological advancements.

This new guidance sends a strong signal that federal regulators are creating a clearer framework for traditional banks to safely engage in the crypto economy. It may also reduce the reliance of U.S. customers on standalone crypto platforms by integrating digital asset services into mainstream financial institutions. From a compliance standpoint, banks must ensure all crypto-related activities are carried out in a safe and sound manner and maintain strict adherence to customer agreements and applicable laws. Banks will not be allowed to freely speculate with customer-held assets. All trading and custody operations must be executed at the customer’s direction, reflecting a non-speculative, service-based model.

Although the OCC’s letter does not add new rules, it explains the current legal range for federally chartered banks to engage in the cryptocurrency industry. This action is likely to raise institutional interest in digital assets and might greatly increase rivalry between crypto-native companies and conventional banks. With this guidance now in place, more banks are likely to integrate crypto custody services into their core offerings, partner with established crypto custodians and infrastructure providers, and explore revenue opportunities through regulated digital asset services. At the same time, it underscores the need for robust risk controls and operational due diligence, especially when dealing with volatile crypto markets and outsourced service layers.