The Office of the Comptroller of the Currency (OCC) has issued a clarifying letter regarding cryptocurrency activities for national banks and federal savings associations, emphasizing the necessity for robust control frameworks before engaging with crypto, distributed ledger technologies, and stablecoins. This move underscores the regulatory body’s commitment to ensuring the safety and soundness of the national banking system as it intersects with the burgeoning digital asset space.
Acting Comptroller Michael J. Hsu initiated a review of previously issued OCC Interpretive Letters 1170, 1172, and 1174 shortly after assuming office. The latest letter serves to provide clarity on these earlier pronouncements, stipulating that while the activities outlined in those letters are permissible, banks must first inform their supervisory office of their intent. Crucially, banks are required to receive written confirmation of non-objection from their supervisory office before proceeding with any cryptocurrency-related activities. This prerequisite ensures a careful and measured approach to integrating crypto services within traditional banking frameworks. It’s a significant step in defining how a “Bitcoin Bank,” or any bank engaging with digital assets, must operate within regulatory boundaries.
Mr. Hsu stated, “Today’s letter reaffirms the primacy of safety and soundness. Providing this clarity will help ensure that these cryptocurrency, distributed ledger, and stablecoin activities will be conducted by national banks and federal savings associations in a safe and sound manner.” This statement highlights the OCC’s primary concern: risk mitigation. Given the novel risks associated with many crypto technologies and products, banks must demonstrate they possess adequate risk management systems and controls. This requirement aims to reassure stakeholders that crypto-asset activities within the federal regulatory perimeter are conducted responsibly and with due diligence. For institutions considering becoming a “bitcoin bank” or offering related services, this translates to a need for significant investment in compliance and risk management infrastructure.
Furthermore, the OCC’s letter reiterated that Interpretive Letter 1176, concerning the OCC’s chartering authority, does not broaden or alter a bank’s existing obligations under fiduciary activities regulations. The OCC retains the authority to determine whether an activity is conducted in a fiduciary capacity under federal law. This clarification is important for banks exploring trust services related to digital assets, ensuring that traditional fiduciary responsibilities extend into the realm of crypto asset management.
The OCC’s letter provides a clear roadmap for banks intending to engage with crypto activities. It details the process for banks to notify their supervisory office in writing about proposed activities and outlines the criteria the OCC will employ to evaluate these proposals before issuing a supervisory non-objection. Upon receiving non-objection, these activities will be subject to the OCC’s standard supervisory processes, ensuring ongoing oversight. This structured approach is designed to facilitate responsible innovation while protecting the financial system.
This announcement follows the interagency statement on the crypto-asset policy sprint initiative, signaling a coordinated effort among regulatory bodies to provide clear guidelines for crypto-assets within the federal banking system. These actions are part of the OCC’s broader initiative to foster clarity and manage risks associated with crypto-assets, paving the way for a more regulated and potentially safer integration of digital currencies and blockchain technology within the traditional banking sector, including the evolution of what might be termed a compliant “bitcoin bank” model.
