US Banks' Crypto Secret: How They're Quietly Profiting From Your Trades
For years, the relationship between traditional US banks and the cryptocurrency industry has been fraught with uncertainty. However, a recent shift in regulatory guidance is revealing a surprising truth: banks are not shying away from crypto, they’re finding ways to profit from it. On December 9th, the Office of the Comptroller of the Currency (OCC) issued a press release signaling a significant change – US banks are now permitted to actively participate in crypto trading, albeit in a specific, “riskless principal” capacity. This isn’t about banks holding Bitcoin on their balance sheets; it’s about them becoming intermediaries, facilitating trades and taking a cut. This article dives deep into the OCC’s recent actions, the implications for the future of crypto custody and trading, and what it means for both banks and crypto companies.
The OCC's Green Light: Interpretive Letter 1188 and Beyond
The OCC’s News Release 2025-121, accompanied by Interpretive Letter 1188, confirms that national banks can operate “riskless principal” crypto-asset transactions as part of their core banking business. This means banks can act as the buyer to one customer and the seller to another, without holding significant token inventories themselves. Essentially, they’re matching orders, similar to how traditional brokerages operate. This is a crucial distinction, as it minimizes the bank’s direct exposure to the volatility of the crypto market.
Comptroller Jonathan Gould further clarified the OCC’s stance, stating he sees no reason to treat digital assets differently than other asset classes when it comes to custody and safekeeping. This position directly addresses lobbying efforts from the Bank Policy Institute (BPI), which urged the OCC to restrict crypto firms from obtaining national trust charters. The OCC is not attempting to isolate crypto; instead, it’s working to integrate it into existing regulatory frameworks.
Why the Bank Policy Institute is Concerned
The BPI’s concerns, outlined in their October statement, center around the potential for crypto firms to gain bank-like privileges without adhering to the same stringent regulations. They argue that exchanges, stablecoin issuers, and fintech platforms are seeking national trust charters as a backdoor to banking activities, bypassing deposit insurance and comprehensive holding-company supervision. The BPI fears an uneven playing field where new entrants can handle substantial payment volumes and reserves with a lighter regulatory touch.
National Trust Charters: A Key Battleground
A national trust bank operates under a specific legal framework, focusing on fiduciary duties like acting as a trustee, executor, or custodian of assets. These entities typically don’t accept traditional retail deposits and often aren’t covered by FDIC insurance. Crucially, they may also avoid the full scope of holding-company supervision under the Bank Holding Company Act. This structure makes national trust charters attractive to crypto firms seeking a federal license with potentially less oversight.
What Does This Mean for Crypto Custody and Trading?
The OCC’s guidance has several significant implications for the crypto industry:
- Banks Can Facilitate Crypto Trades: National banks now have explicit permission to match crypto trades for clients on a riskless principal basis, opening up a new revenue stream.
- Path to National Trust Charters Remains Open: Crypto companies can continue to pursue national trust charters, offering a potential route to operate under federal supervision.
- Integration with Traditional Finance: This move fosters greater integration between the crypto world and the traditional banking system.
For banks, this represents a practical entry point into the crypto space without taking on excessive risk. They can build customer-facing brokerage and routing services while minimizing balance sheet exposure. This builds upon previous OCC letters allowing banks to hold stablecoin reserves and provide basic custody services.
Understanding the US Bank Regulatory Landscape
For those unfamiliar with the US financial regulatory system, it can be complex. The Office of the Comptroller of the Currency (OCC) is an independent bureau within the US Treasury Department. It charters, regulates, and supervises national banks and federal savings associations, as well as foreign bank branches. The OCC’s funding comes from assessments and fees on the banks it oversees, providing a degree of independence from political pressures.
The Role of the Comptroller of the Currency
The Comptroller of the Currency, currently Jonathan Gould, leads the OCC and plays a pivotal role in granting national bank charters. A bank charter is essentially a business license allowing an institution to operate as a bank under federal law. The OCC’s Licensing Manual outlines the rigorous process for obtaining a charter, including demonstrating sufficient capital, a credible management team, a robust business plan, and comprehensive risk controls.
Global Implications and the Future of Bank-Run Crypto
The OCC’s direction is likely to have a ripple effect globally. Large banks operating internationally often look to US regulations when establishing new business lines. Foreign regulators also closely monitor the OCC’s decisions, as they influence the behavior of some of the world’s largest financial institutions.
If US national banks begin offering riskless principal routing for Bitcoin and Ethereum under clear OCC guidance, it will likely influence expectations for similar services in other financial centers like London, Frankfurt, and Singapore. Furthermore, if crypto firms secure national trust charters and operate under federal supervision, it could shift custody and settlement activities away from offshore exchanges and towards regulated US entities.
Challenges and Considerations
While the OCC’s guidance is a positive step, challenges remain. The BPI and other stakeholders continue to raise concerns about the potential risks associated with crypto firms operating under trust charters. The OCC will likely scrutinize applicants closely, evaluating their management quality, financial strength, and commitment to consumer protection. Supervisory agreements and bespoke capital requirements may be imposed to mitigate risks.
The message to the crypto industry is clear: the US banking system hasn’t opened the floodgates, but it has begun to establish clear regulatory pathways for specific crypto activities. This gradual clarification is crucial in a market where regulatory uncertainty is a major impediment to growth.
Crypto firms seeking to access US institutional capital now have a clearer understanding of the requirements. Banks looking to move beyond white-label products can see where their supervisors are willing to draw the lines. Whether this opening leads to a new era of bank-run crypto plumbing or remains a limited experiment will depend on how quickly both sides navigate these new regulatory landscapes.
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Ethereum Posted In: US, Adoption, Analysis, Featured, Regulation