OCC Rescinds Supervisory Non-Objection Process for Bank Crypto Activities

The federal Office of the Comptroller of the Currency (OCC) has adopted a more permissive regulatory stance towards banks engaging in crypto-asset activities. Key developments include:

On March 7, the OCC issued Interpretive Letter 1183, rescinding the supervisory non-objection process that previously hindered banks from offering crypto services.
In May, the OCC released Interpretive Letter 1184, confirming banks can engage in crypto-asset activities and utilize third-party service providers.
Banks can now offer crypto products without demonstrating compliance processes first, lowering barriers for entry into crypto banking.
The OCC continues to enforce supervisory exams to ensure risk management in banks' crypto activities.
Banks can provide custody services, hold stablecoin reserves, and facilitate payments related to stablecoins, including using third-party sub-custodians.
Ongoing review will occur under the OCC’s regular supervisory process, requiring banks to manage risks effectively.

Permitted Crypto-Asset Activities

Custody services for crypto assets.
Holding deposits and reserves for stablecoins.
Payment-related activities involving stablecoins, including participation in distributed ledgers.

The OCC's changes represent a shift from previous restrictions, emphasizing banks’ responsibilities in managing risks associated with crypto activities. Banks are encouraged to develop robust governance frameworks to navigate regulatory expectations effectively.