OCC reverses Biden-era restrictions on crypto assets

The Office of the Comptroller of the Currency on Friday rescinded Biden-era guidance — in the form of interpretive letters, interagency statements and bulletins — advising banks how to engage with crypto assets.

“These actions are intended to reduce burden, encourage responsible innovation, and enhance transparency,” an agency release stated. “The OCC will examine the activities described in [the interpretive letters] as part of its ongoing supervisory process… New activities should be developed and implemented consistent with sound risk management practices and align with banks’ overall business plans and strategies.”

The OCC issued Interpretive Letter 1183, rescinding Interpretive Letter 1179, which was introduced under President Joe Biden in 2021. The agency also withdrew from two policy statements from 2023 — jointly issued by the Federal Reserve, the Federal Deposit Insurance Corp. and the OCC  — on digital asset risks to both state and national banks.

Interpretive Letter 1179 clarified that national banks and federal savings under OCC purview can legally engage in cryptocurrency custody, stablecoin reserves and distributed ledger payments if they demonstrate adequate risk controls. According to the now rescinded interpretation, banks had to notify their supervisory office before engaging in such activities and receive non-objection approval. 

In the joint statement from January 2023, the three signatories raised concerns such as fraud, ambiguous legality, misleading disclosures, market volatility, stablecoin risks, contagion effects and weak governance in the crypto sector. It emphasized that banks should mitigate risks and avoid unsafe practices even though banks were not technically prohibited from offering crypto-related services.

The second joint statement from February 2023 warned firms that deposits from crypto firms — especially those held on customers’ behalf or those backing stablecoins — are highly volatile and susceptible to rapid outflows due to market stress, regulatory uncertainty or misrepresentations about deposit insurance.

Banks were urged to “monitor the liquidity risks inherent in such funding sources and establish and maintain effective risk management and controls commensurate with the level of liquidity risks from such funding sources.” While the agencies’ second letter did not impose additional restrictions, they stressed the need for strong risk management practices. 

Crypto advocates at the time said the guidance had a chilling effect on banks looking to innovate. 

The OCC’s withdrawal tracks the broader shift that bank regulators have adopted under the Trump administration, which has received praise from the banking industry. American Bankers Association President Rob Nichols swiftly praised the OCC’s move in a statement following the action. 

“We applaud the OCC’s release of Interpretive Letter 1183 confirming the permissibility of national banks to provide key products and services in the digital asset market and removing the requirement for national banks to obtain supervisory non-objection before engaging in these activities,” Nichols said Friday. 

“ABA has strongly advocated that these misguided policies, which created an atypical standard for many product and technology implementations, be rescinded. Banks have a critical role to play in the digital asset ecosystem, which has the potential to be a catalyst for change in traditional financial markets, and the OCC’s actions today are an important step toward enabling that success,” he said.