U.S. Regulator Eases Restrictions on Banks’ Cryptocurrency Activities
Washington, D.C. – March 7, 2023
The Office of the Comptroller of the Currency (OCC) has announced significant changes regarding the engagement of national banks in cryptocurrency activities, including the removal of the requirement for banks to seek advance permission from regulators before participating in the crypto sector. The decision marks a shift in policy on the regulation of financial activities related to digital currencies.
In a statement released on Friday, the OCC clarified that national banks are now permitted to participate in certain cryptocurrency-related activities. These include crypto-asset custody, various stablecoin operations, and involvement in distributed ledger technology networks. The announcement signifies a more accommodating stance towards the burgeoning cryptocurrency market, aimed at fostering innovation while maintaining regulatory oversight.
Rodney Hood, the acting comptroller of the OCC, emphasized the importance of risk management for banks engaging in these activities. "Today’s action will reduce the burden on banks to engage in crypto-related activities and ensure that these bank activities are treated consistently by the OCC, regardless of the underlying technology," he stated.
The new provisions come in the wake of a crypto summit hosted by the White House and shortly after President Donald Trump signed an executive order establishing a strategic reserve for bitcoin and other cryptocurrencies. This confluence of events suggests a positive momentum for the integration of cryptocurrencies into mainstream financial operations.
Furthermore, the OCC officially rescinded prior guidance implemented during the administration of former President Joe Biden, which had instructed banks to clear their crypto activities with regulators beforehand. This included demonstrating that adequate controls were in place to mitigate potential risks associated with cryptocurrency.
By withdrawing earlier guidance, the OCC has also stepped back from joint statements previously issued by U.S. regulators that cautioned banks against engaging with cryptocurrencies. One such statement, issued in 2023, acknowledged the potential for significant volatility within the crypto sector while allowing banks to pursue crypto business under careful scrutiny.
The evolution of these regulations indicates a dynamic shift in the regulatory landscape governing bank interactions with cryptocurrencies, as federal regulators adapt to the rapidly changing financial technology environment.
As the financial sector continues to evolve with the rise of digital currencies, the OCC’s new guidance aims to strike a balance between innovation and risk management, allowing banks to explore opportunities within the cryptocurrency space while ensuring protections are in place for both institutions and consumers.
For further updates on regulatory changes impacting financial institutions, stay tuned for ongoing coverage.
Reporting by Pete Schroeder; Editing by Chris Reese and David Gregorio
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