OCC Interpretive Letter Addresses Crypto Activities, Chartering of Trust Banks

In an interpretive letter issued today, the OCC confirmed that national banks and federal savings associations may engage in certain cryptocurrency activities but added a note of caution that banks would be required to “demonstrate, to the satisfaction of its supervisory office that it has controls in place to conduct the activity in a safe and sound manner.”

Among the legally permissible activities—as articulated in previously issued interpretive letters—are the provision of cryptocurrency custody services; the holding of dollar deposits serving as reserves to back stablecoins in certain circumstances; acting as nodes on an independent node verification network to verify customer payments; and engaging in certain stablecoin activities to facilitate payment transactions on a distributed ledger.

“Today’s letter reaffirms the primacy of safety and soundness. Providing this clarity will help ensure that these cryptocurrency, distributed ledger, and stablecoin activities will be conducted by national banks and federal savings associations in a safe and sound manner,” said Acting Comptroller Michael Hsu. “Because many of these technologies and products present novel risks, banks must be able to demonstrate that they have appropriate risk management systems and controls in place to conduct them safely. This will provide assurance that crypto-asset activities taking place inside of the federal regulatory perimeter are being conducted responsibly.”

The interpretive letter also addressed the OCC’s standards for chartering, or approving the conversion to, a national trust bank, noting that “the OCC retains discretion to determine if an applicant’s activities that are considered trust or fiduciary activities under state law are considered trust or fiduciary activities for purposes of applicable federal law.” The OCC emphasized that “an applicant’s activities will not automatically be deemed to be trust activities—or to be fiduciary activities—solely by virtue of state law.”