OCC Greenlights Banks' Crypto Services, Challenges for Community Banks

The U.S. Office of the Comptroller of the Currency (OCC) issued Interpretive Letter 1184 on May 7, 2025, allowing federally regulated banks and savings associations to custody, buy, sell, and outsource digital asset services. This move, supported by the Federal Reserve and FDIC, marks a significant shift in the regulatory landscape for crypto banking in the United States, aligning with President Trump’s pro-crypto agenda.

While major financial institutions are well-positioned to expand into the digital asset economy, community banks and minority depository institutions (MDIs) face significant challenges. These smaller institutions may struggle to keep up with the new regulatory framework, potentially leading to a two-tier crypto economy that reinforces existing financial disparities.

Interpretive Letter 1184 reaffirms the OCC’s earlier stance that crypto custody is a modern form of traditional safekeeping. Banks can now provide these services directly or through partnerships with sub-custodians and third-party tech vendors. They can also facilitate cash-to-crypto transactions, tax reporting, and trade execution, all with the regulatory green light from federal banking regulators. Acting Comptroller Rodney Hood emphasized that while this opportunity comes with significant responsibility, banks must have strong risk management controls in place to support these novel activities.

However, this expectation may be more manageable for large national banks, which have been allocating resources to prepare for this pivot. For smaller, community-focused institutions, the challenge is more significant. Community banks often lack the capital reserves, legal infrastructure, and cybersecurity staffing to vet or deploy digital asset services. Even with the OCC’s allowance for outsourcing, onboarding third-party providers still carries significant costs and compliance responsibilities.

Historically, community banks have exercised greater caution when regulatory guidance is ambiguous. Now, even as prior supervisory “non-objection” requirements are lifted, the compliance burden remains. For MDIs and Black-owned banks already under frequent examination, a single misstep could have outsize consequences. The question isn’t whether they want to serve crypto-curious clients—it’s whether they can safely afford to try.

Community-focused banks, particularly those serving historically marginalized populations, face an additional layer of scrutiny. These institutions are trusted not just to provide services, but to uphold values. If crypto offerings appear speculative, opaque, or inconsistent with long-term wealth-building, they risk eroding customer trust or undermining financial education progress.

While megabanks race ahead, equipped with in-house legal teams and tech budgets measured in billions, community institutions may remain stuck on the sidelines. The result? A bifurcated system where crypto is seamlessly integrated into the portfolios of high-net-worth customers at large institutions but still perceived as risky, inaccessible, or predatory in lower-income communities. This bifurcation risks cementing crypto as a premium financial service—exactly the opposite of what many early blockchain advocates envisioned.

Even where community banks do engage, new risks emerge. As banks increasingly rely on third-party crypto vendors, they may inadvertently surrender more than technical capacity; they may cede control of customer data, product design, and even brand equity. Many of these vendors operate on a white-label basis, delivering services under the bank’s name while collecting proprietary data and deepening their own customer relationships. If unchecked, this dynamic could relegate community banks to front-end distribution partners in a system where value flows upward and out.

To avoid this future, community banks need more than permission. They need resources, infrastructure, and support to onboard crypto offerings safely and meaningfully. Some solutions worth exploring include shared infrastructure consortia, regulatory sandboxes, and public-private grants, especially for MDIs, to build vendor vetting frameworks, hire crypto compliance staff, or develop educational tools.

The OCC has opened the gates. But whether those gates lead to equitable access or further entrenchment depends on who gets to walk through them, and how. And also, when. Remember, timing in emerging economic opportunities is often everything.

Interpretive Letter 1184 is a welcome milestone, clarifying what banks can do. But it does not guarantee what they will do—or who they will serve in doing so. The most important question now is not whether crypto will be offered by banks. That’s settled. The real question is: Will digital assets become a bridge to financial empowerment or just another product for those who already have options? The institutions that rise to meet this moment won’t be those that move the fastest but those that move with the most intention. That means partnering with care, building with community in mind, and refusing to let a digital divide become crypto’s legacy.