- Interpretive Letter 1188 allows national banks to intermediate crypto trades as riskless principal without holding digital assets.
- Banks must maintain controls for settlement, compliance, and counterparty credit risk under the OCC’s clarified framework.
- The update aligns crypto activity with traditional banking powers and follows rising bank interest in offering regulated crypto services.
The Office of the Comptroller of the Currency, confirmed that U.S. national banks can execute riskless principal crypto transactions for customers. The announcement, released through Interpretive Letter 1188, detailed how banks may intermediate trades in Bitcoin, Ethereum and other crypto assets without holding them. The OCC issued the clarification after reviewing several applications from banks seeking explicit authority.
Regulator Defines Scope of Riskless Principal Activity
The OCC explained that a bank may buy a crypto asset from one customer and sell it to another at the same time. This structure removes market exposure because the offsetting trades occur almost instantly. The regulator cited 12 U.S.C. § 24 to confirm that such activity aligns with the “business of banking.”
According to the letter, the agency emphasized that customers will gain access to crypto transactions through regulated channels rather than unregulated platforms. The document stated that several applicants viewed the structure as a way to offer more controlled services in a growing market.
The letter also noted that banks must verify the legal permissibility of each activity and maintain proper risk controls. The OCC noted counterparty credit risk as the primary concern during settlement.
OCC Outlines Required Controls for Institutions
The regulator stressed that banks need systems to monitor operational and compliance risks. Institutions also need procedures for managing market risk and ensuring safe and sound operations. The OCC referenced earlier guidance that allowed custody of crypto assets and certain stablecoin activities.
Jonathan Gould, who heads the OCC, said the banking system has the capacity to grow. He added that there is no reason to treat digital assets differently from traditional custody services that banks have offered electronically for decades.
Industry Responds to Expanded Bank Authority
Industry analysts noted that the clarification followed years of debate about regulatory treatment. One analyst, known as VanQish, stated that the guidance gives institutions a clearer foundation for crypto brokerage services. He pointed to previous approvals, including the charter granted to Erebor, backed by Peter Thiel, as part of the broader shift.
The update also followed the launch of direct Bitcoin trading for PNC Private Bank clients through Coinbase. That rollout showcased the type of activity that banks can now pursue under the OCC’s clarified framework.
