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Highlights
- The OCC has cleared the last hurdle for Federal Banks to engage in crypto
- Federal Banks can now conduct crypto custody and stablecoin transactions
- Thus far, the President Donald Trump administration is changing the crypto regulation outlook
The Office of the Comptroller of the Currency (OCC) has clarified that Federal Banks are now permitted to carry out “certain cryptocurrency activities.” Industry leaders have described this as the biggest news of the week, and the OCC now confirms that the war on crypto is officially over.
The OCC, Federal Banks, and Crypto
On March 7, the OCC published Interpretive Letter 1183, which clarified banks’ participation in crypto-asset custody. Federal Banks can also participate in certain stablecoin activities to reaffirm their role in the payment sector.
In addition to these two, the OCC said banks may engage in some Decentralized Finance (DeFi) activities. These include taking up an independent role in node verification for blockchain protocols.
In addition to these allowances, the Currency Comptroller also rolled back the need for licenses by banks before participating in these DeFi activities. Ultimately, the OCC clarified that banks may also pursue these crypto activities without proof that they have “adequate controls in place before they can engage in these cryptocurrency activities.”
As part of its broad pivot in digital asset regulation, the OCC said it has withdrawn “its participation in the joint statement on crypto-asset risks to banking organizations and the joint statement on liquidity risks to banking organizations resulting from crypto-asset market vulnerabilities.”
End To Operation Chokepoint 2.0
Unlike the Federal Deposit Insurance Commission (FDIC), Coinbase was involved in Operation Chokepoint 2.0, while the OCC was more conservative. The current Interpretive Letter confirms that Operation Chokepoint 2.0 has ended.
During the Presidential Campaign last year, President Donald Trump promised to end all war on crypto. With banks now free to engage in core crypto activities, the doors to more mainstream adoption are opened.
The White House Crypto Summit, held on March 7, also underscores the urgency of digital asset regulation. During the Summit, President Trump promised to have key crypto bills signed by August this year.
Federal Banks and Crypto Competition
While allowances for banks are welcome in the industry, some leaders disagree on the grand governmental involvement. With billions in Assets Under Management (AUM), critics believe mainstream banks may bring unhealthy competition in the market.
Already, top banks are buying Bitcoin through ETF products, which they may now do directly through the OCC directive. Solana Founder Anatoly Yakovenko believes government involvement can alter the decentralization tenet of the broader crypto industry.
The OCC Crypto Summit update has not changed the sentiment in the broader market. Following the summit, Bitcoin dropped 4.06% to $86,600, dragging altcoins along.
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