OCC Guidance Suggests National Banks May Facilitate Riskless Crypto Trades

• National banks may act as principals in crypto trades with customers while offsetting with another party, mirroring traditional market practices.

• This guidance expands banking activities to include crypto intermediation, providing safer alternatives to unregulated options.

• Under 12 U.S.C. § 24, riskless principal transactions qualify as part of the business of banking, with banks required to manage counterparty credit risks effectively.

Discover how the OCC’s latest guidance empowers national banks to handle crypto trades securely. Learn the implications for regulated digital asset services and risk management in 2025.

What Does the OCC’s Guidance Mean for National Banks Crypto Trades?

National banks crypto trades have received a significant boost from the US Office of the Comptroller of the Currency’s interpretive letter, which affirms that banks can facilitate these activities as riskless principals. This means banks can execute trades for customers without retaining the cryptocurrencies on their balance sheets, entering offsetting transactions to neutralize risks. The guidance, released on a Tuesday in late 2024, underscores that such intermediation falls squarely within the established “business of banking,” enabling institutions to compete in the evolving digital asset market while adhering to regulatory standards.

The letter highlights how this approach benefits customers by offering access to crypto services through trusted, regulated entities rather than less supervised platforms. Banks must still verify the legality of each activity and implement robust risk monitoring procedures, ensuring compliance with operational, compliance, and market demands. This development marks a pivotal step in integrating traditional finance with cryptocurrency ecosystems.

How Do Riskless Principal Crypto Transactions Work for Banks?

Riskless principal crypto transactions involve a national bank acting as an intermediary, buying cryptocurrency from one customer and immediately selling it to another at a predetermined price, thus avoiding balance sheet exposure. According to the OCC’s interpretive letter, this structure is permissible under 12 U.S.C. § 24, which defines the scope of banking activities. The primary risk identified is counterparty credit risk, particularly settlement risk, but banks’ expertise in managing such exposures in traditional markets equips them to handle crypto scenarios effectively.

Supporting data from the guidance emphasizes that several applicants have proposed these services to expand offerings in the burgeoning crypto market. For instance, the letter notes that customers gain from transacting through regulated banks, reducing reliance on non-regulated entities. OCC head Jonathan Gould reinforced this by stating that the banking system has the capacity to evolve, with no justification for treating digital assets differently from other electronic custody services banks have provided for decades. Institutions must maintain procedures to monitor risks, confirming alignment with chartered powers and legal permissibility. This framework draws parallels to securities transactions, where riskless principal activities are already established, but extends clarity to non-securities crypto assets.

The interpretive letter, a nonbinding document outlining the agency’s view on permissible activities, was issued shortly after Gould’s comments on treating crypto firms seeking federal charters equivalently to traditional banks. This guidance builds on prior OCC positions, promoting innovation while prioritizing safety and soundness in the financial system.

Historically, supervisory pressures under previous administrations, often labeled “Operation Choke Point 2.0” by industry advocates, had curtailed banks’ engagement with crypto firms. However, the shift toward a more supportive policy environment since early 2025 has encouraged greater participation. This evolution reflects broader federal efforts to foster digital asset integration, with the OCC playing a key role in clarifying permissible activities for national banks.

Expert analysis from financial regulators and industry observers, as referenced in the OCC document, points to the growing demand for crypto services. Banks leveraging this guidance can enhance customer portfolios with digital assets, all while maintaining the high standards of risk management that define the sector. The letter explicitly states that managing counterparty risks is integral to banking, and institutions’ experience positions them well for success in this domain.

Frequently Asked Questions

Can National Banks Hold Crypto Assets on Balance Sheets Under New OCC Rules?

According to the OCC’s interpretive letter, national banks engaging in riskless principal crypto trades do not need to hold assets on their balance sheets, as they act as intermediaries with immediate offsetting transactions. This structure ensures compliance with existing laws while allowing banks to facilitate customer trades securely, focusing on risk mitigation rather than asset custody.

What Risks Do Banks Face in Intermediating Crypto Trades?

Banks primarily face counterparty credit risk, especially settlement risk, when intermediating crypto trades, as outlined in the OCC guidance. However, since managing such risks is a core banking function, institutions are well-prepared with established procedures to monitor operational, compliance, and market exposures, ensuring safe participation in the digital asset space.

Additional considerations include verifying the legal status of crypto activities and aligning them with bank charters. The guidance stresses that while permissible, banks must implement tailored risk controls to address the unique volatility of cryptocurrencies compared to traditional assets.

Key Takeaways

• OCC Affirmation Expands Banking Scope: The interpretive letter confirms riskless principal crypto intermediation as part of the business of banking, enabling national banks to offer new services without balance sheet burdens.
• Risk Management Remains Central: Counterparty credit and settlement risks are highlighted, but banks’ expertise in these areas supports effective oversight, drawing from traditional market practices.
• Policy Shift Toward Inclusion: This guidance reflects a pro-crypto stance, contrasting prior restrictions and positioning regulated banks as preferred gateways for customer digital asset transactions.

Conclusion

The OCC’s interpretive letter on national banks crypto trades and riskless principal crypto transactions represents a landmark clarification, integrating digital assets more seamlessly into the regulated financial landscape. By affirming these activities under 12 U.S.C. § 24, the guidance empowers banks to meet growing customer demand while upholding stringent risk protocols. As the sector continues to mature, this development signals a future where traditional institutions lead in providing secure, innovative crypto services, benefiting the broader economy through enhanced accessibility and stability.