OCC Goes All-In on Crypto: Banks Now Free to Buy, Sell, and Custody Digital Assets

Holy crypto revolution, Batman! The OCC just flipped the script on its crypto policy, giving banks the green light to dive into the digital asset pool. They can now buy, sell, and hold cryptocurrencies in custody for their customers. And that's not all - banks can also offer crypto custody services like it's nobody's business!

In a mind-blowing post, Acting Comptroller of the Currency, Rodney Hood, dropped the mic, declaring that crypto is no longer just a passing fad. Nope, it's a full-on "transformation," according to the federal agency. They've decided to ditch their previous cautious approach and let banks go wild with crypto-related financial activities.

"We've given the thumbs up for national banks and federal saving associations to responsibly engage in certain cryptocurrency activities to serve their customers," Hood announced in a video that's sure to go viral.

OCC-regulated banks can now buy and sell assets held in custody and even outsource bank-permissible crypto-asset activities, including custody and execution services. It's like a crypto free-for-all!

These banks can buy and sell crypto held in custody at their customers' direction. Plus, they can outsource crypto custody and execution services to third parties. But hold up - financial institutions better make sure these services meet the OCC's safety standards and soundness criteria, or it's game over.

And wait, there's more! OCC-regulated banks can also provide other custody services to customers, like record keeping, tax, or reporting services related to cryptocurrency. It's like a one-stop crypto shop!

"While banks and their third parties can perform a range of cryptocurrency and digital asset activities, let me be crystal clear: the OCC expects these activities to be conducted safely, soundly, and in compliance with the law," Hood warned.

In a document released by the OCC on May 7, they laid out their new crypto stance. Banks can act as fiduciaries and sub-custodians to provide custody services, but they better follow appropriate third-party risk management practices.

"The services national banks can provide in relation to the cryptocurrency they're custodying include facilitating customer crypto and fiat currency exchange transactions, transaction settlement, trade execution, record keeping, valuation, tax services, reporting, or other appropriate services," the OCC wrote. It's like a crypto buffet!

The Fed, OCC, and SEC: The Pro-Crypto Shift in Banking Regulations

The OCC's crypto flip is just one piece of a larger puzzle. Federal organizations are embracing crypto left and right, thanks to the Trump administration's friendlier stance towards the industry. Banks now have more freedom to get in on the crypto action following recent regulatory changes.

In late April, the U.S. Federal Reserve dropped a bombshell, removing its requirement for state banks to give a heads-up before diving into crypto-related activities. Talk about a game-changer!

But that's not all - the Fed also yanked its 2023 guidelines that limited how banks could deal with stablecoins. The Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency followed suit, retracting two joint statements from that same year. It's like a regulatory revolution!

In March this year, a bunch of crypto firms were reportedly lining up to apply for banking licenses to expand their businesses and potentially reduce borrowing costs. Plus, a bank charter would make them look legit in the eyes of their customers.

And last January, the Securities and Exchange Commission pulled a fast one, removing a rule that forced banks holding crypto to list it as a liability. That move eased the pressure on financial institutions and opened the door for more crypto action.