OCC Greenlights Banks to Custody Crypto—And Farm It Out to Third Parties
Wall Street’s watchdog just handed banks a backstage pass to the crypto circus—with outsourcing as their plus-one.
No more sidelines:
The Office of the Comptroller of Currency (OCC) ruled that federally chartered banks can now hold digital assets for clients. Bonus? They’re free to subcontract the messy bits to crypto custodians. Guess due diligence is also for outsourcing now.
The fine print:
While banks get regulatory cover, the OCC warned they’re still on the hook if their chosen crypto custodian pulls a disappearing act. Because nothing says ’sound banking’ like trusting volatile assets to your vendor’s cold wallet.
Bottom line:
Traditional finance finally admits crypto’s here to stay—but only if someone else handles the explosives. How very… institutional of them.
New directions
Two weeks ago, the Federal Reserve, along with the Federal Deposit Insurance Corporation (FDIC), withdrew supervisory letters that had required banks to obtain prior consent before engaging with crypto, effectively ending "Choke Point" practices that have hindered and marred the crypto industry’s reputation.
With its new directive, the OCC builds on Interpretive Letter 1170, which in July 2020 initially established banks’ authority to provide crypto custody.
Banks could offer and provide "cryptocurrency custody services, including holding the unique cryptographic keys associated with cryptocurrency," the OCC wrote at the time, characterizing such activities as "a modern form" of traditional banking.
But that early openness was later tempered in 2021 and 2022, under a new administration, the OCC—alongside the Federal Reserve and FDIC—issued guidance requiring banks to obtain written supervisory non-objection before engaging in crypto-related activities, effectively stalling institutional adoption. That policy has now been reversed with the OCC’s latest guidance.
It comes as some traditional banks seek crypto market entry without building infrastructure from scratch, even as critics, like President Donald Trump’s son Eric, see some anti-crypto banks as "broken, slow, and expensive."
The OCC’s latest affirmation, meanwhile, follows Interpretive Letter 1183 from earlier in March, in which the office reaffirmed crypto-asset custody, distributed ledger, and stablecoin activities as "permissible."
At the time, the OCC tagged those three sections as "crypto-asset activities" and noted that banks could develop and engage with them, as long as they are "consistent with sound risk management practices."
Later that month, FDIC followed suit, with Acting Chairman Travis Hill stating the move shows it is "turning the page on the flawed approach of the past three years."
Edited by Sebastian Sinclair
