OCC Clarifies Bank Authority to Engage in Certain Cryptocurrency Activities and Authority of OCC to Charter National Trust Banks

WASHINGTON—The Office of the Comptroller of the Currency (OCC) today published a letter confirming that national banks and federal savings associations must demonstrate that they have adequate controls in place before they can engage in certain cryptocurrency, distributed ledger, and stablecoin activities.

Shortly after taking office, Acting Comptroller Michael J. Hsu announced a review of OCC Interpretive Letters 1170, 1172, and 1174, issued in 2020 and 2021. Today’s letter clarifies that the activities addressed in the previous interpretive letters may be conducted after a bank notifies its supervisory office of its intent to engage in the activities, and after a bank receives written notification of the supervisory office’s non-objection. The bank should not engage in the activity until it receives a non-objection from its supervisory office.

“Today’s letter reaffirms the primacy of safety and soundness. Providing this clarity will help ensure that these cryptocurrency, distributed ledger, and stablecoin activities will be conducted by national banks and federal savings associations in a safe and sound manner,” Acting Comptroller Hsu said. “Because many of these technologies and products present novel risks, banks must be able to demonstrate that they have appropriate risk management systems and controls in place to conduct them safely. This will provide assurance that crypto-asset activities taking place inside of the federal regulatory perimeter are being conducted responsibly.”

Today’s letter also reiterated that OCC Interpretive Letter 1176 on the OCC’s chartering authority did not expand on or change a bank’s existing obligations under the OCC’s fiduciary activities regulations. The OCC retains discretion in determining whether an activity is conducted in a fiduciary capacity for purposes of federal law.

The letter provides a roadmap for banks to engage with their supervisory office to provide written notification of their proposed activities and outlines the criteria that the OCC will follow to evaluate the proposed activity and provide a supervisory non-objection. If the bank receives a supervisory non-objection, the OCC will review these activities as part of its ordinary supervisory processes.

This letter follows the release of an interagency statement on the crypto-asset policy sprint initiative. Both are part of the OCC’s efforts to provide clarity about crypto-assets and the federal banking system.

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