On March 7, 2025, the Office of the Comptroller of the Currency (“OCC”) released Interpretive Letter 1183, marking a pivotal change in regulatory guidance for national banks and federal savings associations engaging in cryptocurrency activities. This recent directive, issued under Acting Comptroller Rodney Hood, rescinds the requirements set by Interpretive Letter 1179 from November 2021. The updated guidance reaffirms the permissibility of certain crypto-related activities while eliminating the need for prior supervisory non-objection.
Background
Interpretive Letter 1183 marks a significant regulatory update under Acting Comptroller Rodney Hood, who assumed his role earlier this year. This letter aims to standardize how banks engage with digital assets, removing the constraints imposed by previous guidance. The rescinded directive from former Acting Comptroller Michael Hsu required banks to seek supervisory approval before participating in crypto activities—a process that was often seen as a barrier to innovation and growth in the sector.
In contrast, the new guidance focuses on reducing regulatory burdens and fostering transparency, thereby encouraging responsible innovation within the banking industry. The OCC continues to support activities outlined in earlier interpretive letters, such as crypto asset custody (IL 1170), stablecoin reserves (IL 1172), and blockchain payment facilitation (IL 1174), initially introduced under former Comptroller Brian Brooks.
Understanding the Interpretive Letters
The OCC’s interpretive letters serve as legal clarification for national banks, delineating the scope of permissible activities concerning digital assets. These letters play a central role in shaping the regulatory landscape, offering clarity on the integration of traditional banking operations with emerging cryptocurrency technologies. Each letter addresses specific aspects of crypto involvement, reflecting the evolving understanding and acceptance of digital finance within the regulatory framework:
- IL 1170 (July 2020): This letter was a milestone, officially allowing banks to offer crypto asset custody services. It enabled banks to securely store digital assets for their customers, integrating cryptocurrency management into mainstream banking services.
- IL 1172 (September 2020): Focused on stablecoins, this letter permits banks to hold deposits as reserves for these digital currencies. It acknowledges the growing role of stablecoins in financial transactions, providing a regulated pathway for banks to engage with this asset class under specific conditions, such as compliance with anti-money laundering protocols.
- IL 1174 (January 2021): This letter authorized banks to utilize distributed ledger technology, facilitating payment activities involving stablecoins. It highlights the potential of blockchain technologies to enhance payment systems, allowing banks to act as nodes on verification networks, thereby increasing efficiency and transparency in financial transactions.
- IL 1179 (November 2021): Introduced under the Biden administration, this letter required banks to obtain a supervisory non-objection before engaging in cryptocurrency activities. This regulatory step aimed to ensure adequate risk management but posed a hurdle for institutions eager to innovate in the crypto space.
- IL 1183 (March 2025): The latest letter rescinds IL 1179, removing the non-objection requirement and reaffirming the permissibility of activities outlined in previous letters. It reflects the OCC’s confidence in banks’ risk management capabilities, promoting a streamlined approach to integrating digital asset services while maintaining safety and soundness standards.
Through these interpretive letters, the OCC provides a structured approach for banks to navigate the complexities of digital assets, ensuring that innovation can proceed within a safe and regulated environment.
Evolving Policies
Alongside Interpretive Letter 1183, the OCC has retracted its support for joint statements on crypto-asset risks issued in collaboration with the Federal Reserve and FDIC earlier this year. These statements highlighted the potential risks posed by crypto markets to banking stability, particularly after high-profile incidents like the FTX collapse. The withdrawal signifies a shift in the OCC’s approach, focusing on integrating digital assets within traditional banking frameworks while maintaining safety and soundness.
Looking ahead, the updated guidance may pave the way for banks to re-enter the crypto sector, potentially through partnerships with established service providers. However, the industry anticipates further regulatory adjustments from the Federal Reserve and FDIC to establish a comprehensive framework for crypto banking services.
Conclusion
The OCC’s latest interpretive letter marks a transition in the regulatory landscape for banks dealing with digital assets. By re-affirming and broadening the scope of permissible activities, the letter indicates a growing acceptance of cryptocurrencies within the banking sector, setting the stage for future developments. As banks explore these opportunities, they must continue to uphold robust risk management practices to ensure the safety and soundness of their operations.
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