OCC Greenlights National Banks for Crypto Activities

The Office of the Comptroller of the Currency (OCC) recently issued a clarification that national banks can engage in certain crypto activities without necessarily seeking prior approval from regulators. This shift in tone from the OCC is significant as it provides a green light for banks to explore the digital asset space, including the potential issuance of stablecoins and the provision of banking services to crypto firms.

Brian Montgomery, a partner at Pillsbury, noted that his clients, which include banks and financial institutions, are enthusiastic about the OCC's new stance. Montgomery, who was present at a banking conference where OCC’s acting Comptroller Rodney Hood spoke, observed that Hood seemed very eager to open this avenue for banks. Several large national banks are now considering the idea of issuing stablecoins, indicating a growing interest in the crypto space.

Montgomery highlighted that while the OCC's statement applies only to national banks, similar guidance from the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve would be necessary to align the regulatory stance across the board. However, he believes that this alignment is just a matter of time, possibly within the next three to four months, though he cautioned that this timeline is speculative.

The OCC's clarification comes at a time when there are reports suggesting that the President is considering an executive order to roll back some of the anti-crypto banking policies implemented by the previous administration. This potential executive order could focus on the Federal Reserve’s policies and might be signed soon, further accelerating the regulatory shift towards crypto.

Montgomery emphasized that while the federal administration and regulators are moving in a positive direction, state regulators also play a crucial role. He noted that state regulations, particularly those related to money transmission activities, will still need to be considered. Despite this, Montgomery is optimistic that the hurdles posed by state regulators will not be insurmountable.

In summary, the OCC's tone shift signals a significant step forward for banks looking to adopt crypto. The clarification provides a regulatory framework that allows national banks to engage in crypto activities, potentially leading to the issuance of stablecoins and the provision of banking services to crypto firms. While state regulations remain a consideration, the overall trend indicates a growing acceptance of crypto within the banking sector.