OCC Opens Doors for US Banks in Crypto Revolution

Story Highlights

• The OCC now permits US banks to deal in cryptocurrency without prior clearance.
•  The SEC has taken a more crypto-friendly approach, dismissing lawsuits.
•  Trump’s government continues to promote crypto-friendly financial regulations.

The US Office of the Comptroller of the Currency (OCC) has shifted a significant policy, which will permit banks to do crypto business without first obtaining permission from regulators. This is the reverse of the Biden administration’s action in imposing restrictions on such activities and aligns with the Trump administration’s pro-crypto policy.

Rodney Hood, who is the acting comptroller, emphasized that even though banks will still have to manage risks, they will be free from the regulators’ prohibitions to provide crypto services. “Today’s action will alleviate the burden on banks and provide for consistent treatment of crypto activities, regardless of the technology,” Hood explained in an official statement.

US Banks Get Crypto Access as OCC Relaxes Restrictions

Crypto companies such as Coinbase have also been calling for regulatory clarity for a long time. The exchange has already requested the highest regulators, the OCC, Federal Reserve, and FDIC, to approve banks to offer crypto custody and trading services. Coinbase Chief Legal Officer Paul Grewal greeted the OCC’s action, saying, “Regulatory clarity is long overdue. Banks and crypto companies need a clear rulebook, not just changing guidelines.”

The action also follows as the U.S. Securities and Exchange Commission (SEC) under Mark Uyeda becomes more crypto-friendly. The SEC recently dropped suits against leading crypto firms like Kraken and OpenSea, a step towards more open regulations. The agency also ended its court battle with Coinbase, further entrenching this policy trend.

While the OCC withdrew and the Trump regime went all-in on crypto, the industry waits with anticipation to be integrated with mainstream finance. David Sacks, the recently appointed “AI & Crypto Czar” in Trump’s ranks, has done much of this heavy lifting by getting repealed, for instance, an SEC regulation that regarded cryptos stored on bank balance sheets as liabilities. 

Regulators have given them the go-ahead despite concerns. Banks still carry risk management burden and deal with evolving demands. Now the question is whether the large financial institutions will welcome crypto or stay aloof because of legality and market unpredictability.

The OCC’s ruling is a landmark moment in crypto banking, paving the way for increased institutional adoption. But the long-term effect will hinge on how banks and regulators frame the next generation of financial innovation.