The US Office of the Comptroller of the Currency has confirmed that national banks can act as intermediaries in cryptocurrency trades as riskless principals without needing to hold the assets on their balance sheets, advancing traditional banks toward providing regulated crypto brokerage services.
In an interpretive letter issued on Tuesday, the regulator stated that banks can function as principals in a crypto trade with one customer while simultaneously entering an offsetting trade with another, resembling riskless principal activities in traditional markets.
“Numerous applicants have expressed how executing riskless principal crypto-asset transactions would benefit their proposed bank’s clients and operations, including through the provision of additional services in a burgeoning market,” the document notes.
As stated by the OCC, this development would enable customers “to engage in crypto-assets through a regulated bank, rather than through non-regulated or less regulated alternatives.”
The letter also emphasizes that banks must verify the legal permissibility of any crypto activities and ensure alignment with their chartered powers. Institutions are required to uphold procedures for overseeing operational, compliance, and market risks.
“The principal risk in riskless principal transactions is counterparty credit risk (particularly, settlement risk),” states the letter, adding that “managing counterparty credit risk is essential to the banking business, and banks possess experience in managing this risk.”
The agency’s guidance references 12 U.S.C. § 24, which allows national banks to conduct riskless principal transactions as part of the “business of banking.” The letter also differentiates between crypto assets that are classified as securities, noting that riskless principal transactions involving securities have already been clearly permissible under existing law.
The OCC’s interpretive letter — a nonbinding guidance outlining the agency’s stance on activities that national banks may undertake under current law — was released a day after OCC head Jonathan Gould stated that crypto firms seeking a federal bank charter should be treated equally to traditional financial institutions.
According to Gould, the banking system has the “capacity to adapt,” and there is “no reason to treat digital assets differently” from traditional banks, which have provided custody services “electronically for decades.”
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From ‘Choke Point 2.0’ to pro-crypto policy
During the Biden administration, various industry groups and lawmakers accused US regulators of enforcing what they termed “Operation Choke Point 2.0,” claiming it heightened scrutiny on banks and companies involved with crypto.
Since US President Donald Trump took office in January after promising to support the sector, the federal government has shifted in the opposite direction, adopting a more lenient stance towards digital asset activity.
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