US banking authority clears path for crypto services at national banks

The Office of the Comptroller of the Currency (OCC) confirmed on May 13 that national banks are now authorized to engage in a wide range of crypto-asset activities, removing long-standing regulatory ambiguities that had kept many financial institutions on the sidelines.

In tandem with recent moves by the Federal Reserve, the policy shift opens the door for national banks to offer crypto custody, execute trades at customer direction, and outsource digital asset services under established third-party risk guidelines.

OCC announcements and letters

The OCC’s announcement, delivered via a statement and supported by Interpretive Letters 1183 and 1184, marks a coordinated rollback of prior restrictions.

Letter 1183, issued March 7, formally rescinds the 2021 supervisory “non-objection” process set out in Letter 1179. It also withdraws the OCC from two joint interagency statements made in 2023 that emphasized crypto-related risk.

Letter 1184, issued May 7, extends authority by permitting banks to buy and sell cryptocurrencies held in custody when directed by clients and to utilize sub-custodians, so long as risk management frameworks align with traditional financial outsourcing standards.

These policy updates align with the Federal Reserve’s April 24 decision to retract its pre-approval guidance for crypto activities, which had applied to state member banks.

Taken together, these actions by the OCC and the Fed dissolve the primary regulatory hurdles that had delayed widespread adoption of crypto services by traditional financial institutions.

The OCC stated that the U.S. banking system is now deemed “well-positioned” to support digital asset activity, provided operations remain “safe, sound, and fair.”

The move reflects broader market conditions and growing customer demand. According to an April 2025 Harris Poll, approximately 55 million Americans, roughly 21% of the adult population, own crypto.

Future of crypto within US TradFi Sector

With the global crypto market cap hovering around $3.33 trillion as of May 13, the scale of the opportunity is no longer viewed as speculative or marginal. For national banks, entering crypto markets now offers a chance to compete for custody fees, transaction revenues, and customer retention in a space where fintech and crypto-native firms have so far led.

The OCC emphasized the growing permanence of digital financial services. “More than 50 million Americans hold some form of cryptocurrency,” Acting Comptroller Rodney E. Hood said. “The digitalization of financial services is not a trend; it is a transformation.”

The framing of this shift as a structural evolution rather than a temporary boom signals the agency’s intention to support integration within established banking models, not just fringe experimentation.

National banks now have federal permission, but implementation challenges remain.

Next steps

Letters 1183 and 1184 reiterate the need for robust compliance with anti-money laundering (AML) requirements and other supervisory expectations, yet they do not provide detailed guidance on areas such as private key management or capital adequacy.

Integration of wallet infrastructure, AML systems, and third-party service contracts will likely take months. Industry estimates suggest deployment timelines of six to twelve months before major national banks can launch full-scale crypto services.

Additional uncertainty remains regarding the treatment of different digital assets. The ongoing jurisdictional contest between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) means that some tokens may still fall into regulatory gray zones.

Furthermore, while banks may custody crypto, the FDIC does not insure digital asset holdings, an important caveat for customer communications and marketing disclosures.

Still, regulators’ convergence on a permissive stance represents the most pronounced shift in U.S. banking policy on crypto since the OCC’s 2020 Letter 1170 first authorized national banks to custody digital assets.

The newly released guidance not only supersedes subsequent restrictions but also realigns U.S. financial oversight with ongoing adoption cycles in Europe and Asia, where regulated crypto services have already entered institutional channels.

The policy evolution arrives amid political pressure to end perceived de-banking of crypto firms and advance broader innovation goals.

Allegations that regulators had participated in a coordinated campaign, sometimes labeled “Operation Chokepoint 2.0,” to limit crypto access to the banking system have become more prominent in recent years. The OCC and Fed’s synchronized reversals may be interpreted as a move to neutralize those criticisms and align with the current administration’s pro-innovation rhetoric.

As Letters 1183 and 1184 take effect, competition will likely intensify across the custody and trading landscape.

Traditional banks, with their embedded client bases and regulatory infrastructure, now have a channel to compete directly with crypto-native firms. With customer trust in traditional banks still outweighing that of exchanges after the 2022 collapse, incumbents could gain ground swiftly.

However, success will hinge on how quickly and effectively these institutions can translate regulatory permission into operational readiness.