What the OCC and the Fed say on bank crypto custody
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Annelise Capossela/Axios
The OCC, a bureau of the Treasury Department charged with overseeing national banks, put out an interpretative letter Wednesday further clarifying that the banks it supervises are allowed to hold crypto for their customers.
Why it matters: The OCC is one of three big U.S. bank regulators that recently rolled back earlier guidance that had basically kept banks out of crypto — but some crypto supporters believe the message can still be more clear.
Catch up quick: The OCC's statement on Wednesday builds on a broader letter from early March that rolled back previous guidance requiring national banks to get a green light from the agency before doing anything with digital assets.
- This update follows other directives in recent months from the other regulators, the Fed and the FDIC, rescinding similar restrictive guidance to banks.
- And the three regulators together in April withdrew two joint statements from early 2023 which had warned banks of risks from crypto-related activities. That statement had come two months after the meltdown of FTX, the cryptocurrency exchange led by Sam Bankman-Fried.
The intrigue: One of the blockchain industry's champions in Congress, Sen. Cynthia Lummis (R.-Wyo.), recently raised doubts that the Fed's policy, in particular, has actually changed.
- The Senator specifically pointed to a Feb. 2023 policy statement from the Fed that remains standing today.
That policy statement states that it's unsafe and unsound for banks to hold cryptocurrency.
- The Bank Policy Institute trade association actually drew attention to that surviving policy, among others, and called for its revision in a May 1 letter to the President's Working Group on Digital Asset Markets.
- The Blockchain Association has also raised the policy with the new administration.
Between the lines: The language in the Fed policy statement that concerns the crypto industry is reflected in contextual language that leads the document.
- And a revision the document makes to its rules states that state-chartered banks (which the Fed oversees) need to follow rules for national banks (which the OCC oversees), as well as the laws in their respective states. The actual revision in policy language doesn't take on digital assets specifically at all.
- The policy is essentially one that points to other policies, and those policies which directly address crypto have been rescinded since President Donald Trump took office.
What's inside: "The Board generally presumes that it will ... limit state member banks and their subsidiaries to engaging as principal in only those activities that are permissible for national banks," the policy statement says, in the part of the document that actually revises Federal code.
In other words, that means that under the two new policy guidances from the OCC, state-chartered banks — overseen by the Fed — could also hold cryptocurrencies, provided their state's laws allow it.
Our thought bubble: It is definitely confusing.
- A reasonable read though is that, since the policies the Fed relied on have been struck down, its earlier analysis no longer applies
What we're watching: Whether or not the Fed issues a new version of this policy statement.
