Main Points：
- OCC’s May 7 interpretive letter clarifies that national banks and federal savings associations may execute customer‑directed crypto trades and, with robust third‑party risk management, outsource custody and execution services.
- The letter reaffirms banks’ authority to provide crypto custody as a “modern form” of traditional bank custodial services under existing statutes.
- This follows similar moves by the FDIC—rescinding pre‑approval requirements for crypto activities—and aligns with the OCC’s shift away from “reputational risk” assessments.
- Industry leaders such as Caitlin Long and chartered crypto banks like Anchorage Digital Bank welcome the clearer, risk‑based framework.
- US regulators are increasingly enabling banks to integrate digital‑asset services, presenting new opportunities for fintech developers, VASPs, and institutional clients.
- Banks must still manage market, liquidity, operational, cybersecurity, consumer‑protection, and AML risks when engaging in crypto activities.
Background: OCC’s Crypto Custody Framework
Since issuing its first interpretive letter on crypto custody in July 2020, the OCC has considered digital‑asset services a legitimate extension of banks’ fiduciary duties. The May 7, 2025 letter reaffirms that national banks and federal savings associations (“banks”) possess inherent authority under 12 USC § 24(Seventh) to provide custodial services for crypto assets, whether acting as trustee or through non‑trustee arrangements. By framing crypto custody as a “modern form of traditional bank custody,” the OCC underscores continuity with existing statutory powers rather than creating new authorities.
Clarification of Customer‑Directed Trades
The new letter explicitly permits banks to execute buy and sell orders for custodial crypto holdings upon customer instruction. Where previously banks faced uncertainty over whether offering execution services would exceed their charter, the OCC now confirms that trading activities—so long as they pertain to assets held under custody—fall squarely within banks’ custodial remit. Banks must, of course, integrate these activities into their existing compliance frameworks and ensure adherence to contractual and legal obligations governing client assets.
Outsourcing Custody and Execution Services
Recognizing practical operational needs, the OCC allows banks to delegate custody and execution functions to qualified third parties if they maintain a robust third‑party risk management program. Services that may be outsourced include trade execution, recordkeeping, valuation, and tax reporting. However, when acting as trustee, banks remain bound by trust‑law duties and applicable fiduciary rules, necessitating careful oversight of sub‑custodians and clear contractual safeguards.
Market Implications for Banks and Customers
The OCC’s clarity arrives amid a broader regulatory shift. On March 28, 2025, the FDIC issued Financial Institution Letter FIL‑7‑2025, rescinding prior guidance requiring FDIC‑supervised institutions to seek approval before engaging in permissible crypto activities. This regulatory easing signals that both chartering and supervisory arms of US banking agencies now view digital assets as safety‑and‑soundness considerations, not reputational liabilities. Customers of national banks can expect a wider array of custody and execution options, potentially benefiting from banks’ robust risk management and deposit‑insurance frameworks.
Industry Response and Perspectives
Caitlin Long, CEO of Custodia Bank, lauded the OCC’s move, arguing that “reputational risk is subjective, and banks should not be constrained by political or social perceptions of crypto.” Similarly, Anchorage Digital Bank—today the only federally chartered crypto bank in the United States—has emphasized its commitment to compliance under federal oversight while advocating for a level playing field for all banks. By removing ambiguity around permissible activities, regulators enable banks and VASPs to innovate service offerings such as tokenized deposit products, secure staking services, and integrated custody‑execution platforms.
Global Regulatory Context and Comparisons
While the OCC and FDIC advance a risk‑based approach, other jurisdictions are charting parallel courses. The European Central Bank is evaluating banks’ roles in digital euro pilot programs, and the UK’s Financial Conduct Authority has recently consulted on stablecoin issuance by regulated firms. In the US, the Senate Banking Committee hearing on February 5, 2025, highlighted the real‑world impacts of “debanking” crypto firms and underscored the need for clear, consistent rules. Nathan McCauley, CEO of Anchorage Digital, testified on how his bank navigated debanking risks despite holding a federal charter. As global regulators converge on harmonized standards, US banks are positioned to lead in compliant, institutional‑grade digital‑asset services.
Emerging Trends and Developments
Several noteworthy developments illustrate the momentum in bank‑crypto integration:
- Institutional Partnerships: Anchorage Digital Bank recently became the digital‑asset service provider for BlackRock, enabling one of the world’s largest asset managers to explore tokenized vehicle custody.
- Stablecoin Engagement: FDIC guidelines also acknowledge banks’ potential roles in stablecoin activities, including issuance and redemption functions, provided risk frameworks are in place.
- Risk‑Management Platforms: Leading digital‑asset banks leverage specialized risk‑monitoring tools—Anchorage uses TRM Labs for transaction surveillance and compliance—to meet AML and cybersecurity obligations.
Opportunities for Blockchain Practitioners
Developers, compliance officers, and fintech entrepreneurs can harness this regulatory clarity to:
- Build Bank‑Integrated DApps: Design decentralized applications that interface seamlessly with bank custody APIs for real‑time trading and settlement.
- Offer Compliance Services: Provide third‑party risk management frameworks, audit tooling, and smart‑contract security audits tailored to banking clients.
- Tokenization Solutions: Deploy tokenization platforms for real‑world assets—such as tokenized bonds or deposit receipts—leveraging banks’ custody engines and legal structures.
Challenges and Risk Management
Despite the opening, banks must carefully navigate:
- Market and Liquidity Risk: Volatile crypto prices require dynamic margin and liquidity buffers, consistent with 12 CFR Part 364 guidelines.
- Operational and Cybersecurity Risk: Robust systems for key management, incident response, and network security are non‑negotiable.
- AML/CFT Compliance: Banks must integrate blockchain analytics and identity‑verification tools to meet Bank Secrecy Act requirements and FinCEN guidance on digital assets.
Conclusion
The OCC’s May 7, 2025 interpretive letter marks a pivotal moment in US banking regulation, offering clear, risk‑based authority for national banks and federal savings associations to provide comprehensive crypto custody and execution services. Coupled with the FDIC’s rescission of pre‑approval mandates, the US banking system is better positioned to support digital‑asset innovation while safeguarding safety and soundness. For banks, VASPs, and blockchain practitioners alike, the path forward involves leveraging these regulatory frameworks to build integrated, compliant, and customer‑centric crypto services—unlocking new revenue streams and practical blockchain applications across the financial ecosystem.
