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- The OCC makes an initial step towards creating easier banking access for crypto firms as it rescinds certain Agency decisions.
- Earlier, Treasury Secretary Scott Bessent disclosed that he would be working with the OCC to withdraw guidances that are affecting the crypto industry.
The Office of the Comptroller of the Currency (OCC) has, in a recent interactive letter, backtracked from the Agency’s policy on bank engagement with crypto.
According to the letter, crypto-asset custody, “certain stablecoin activities as well as the participation in independent node verification networks are permissible for national banks and federal savings associations.” Fascinatingly, this comes after its new leadership promised easier banking access for crypto firms, as featured in our recent coverage.
Reviewing the publication, we found that the requirement for institutions supervised by the OCC was also rescinded. Commenting on this, Acting Comptroller of the Currency Rodney E. Hood explained that the Agency expects banks to maintain their strong risk management controls to support the activities of novel banks just as they do for the traditional ones.
Today’s action will reduce the burden on banks to engage in crypto-related activities and ensure that these bank activities are treated consistently by the OCC, regardless of the underlying technology. I will continue to work diligently to ensure regulations are effective and not excessive while maintaining a strong federal banking system.
Meanwhile, the OCC rescinded its participation in the joint statement concerning crypto asset risks as well as the joint statement on the liquidity risks to bank organizations which mostly lead to vulnerabilities in crypto assets. This guidance, according to our research, was issued in 2023 after the collapse of the FTX exchange.
More About the Bank and the Crypto Policies
During the Biden administration, the OCC and other banking regulators insisted on the risk imposed by digital assets on the financial system. However, the Trump administration has argued that those decisions led to the debanking of individuals and companies in the crypto ecosystem.
Commending the decision, American Bankers Association (ABA) President and CEO Rob Nichols highlighted that the current action by OCC is a big step towards involving banks in the fast-evolving crypto market.
ABA has strongly advocated that these misguided policies, which created an atypical standard for many product and technology implementations, be rescinded. Banks have a critical role to play in the digital asset ecosystem, which has the potential to be a catalyst for change in traditional financial markets, and the OCC’s actions today are an important step toward enabling that success.
This announcement also comes against the backdrop of President Donald Trump’s Digital Asset Summit. As indicated in our earlier discussion, he gathered multiple crypto entrepreneurs to meet the members of his administration.
During a publicly streamed portion of the meeting, Treasury Secretary Scott Bessent emphasized that he would work with the Office of the Controller of the Currency and the IRS to withdraw any guidance that negatively affects the digital asset market.
Meanwhile, the Federal Deposit Insurance Corporation (FDIC) has been criticized for not speeding up Banks’ participation in the crypto market. While the Federal Reserve has not given any update on the banking and crypto, its chair Jerome Powell disclosed previously that the Central Bank would revisit the guidance. Powell has also confirmed his interest in digital assets as he likens Bitcoin to gold, according to our recent post.
Meanwhile, this latest decision is expected to enable banks to actively participate in blockchain networks like XRP Ledger. The XRPL stands as a highly scalable and efficient blockchain created for institutional-grade financial transactions. A successful adoption is also expected to have a major impact on the XRP price which has been tipped for a bullish run this cycle.
