Key Insights
- •The Office of the Comptroller of the Currency published Interpretive Letter 1188 on December 9, confirming that national banks have the authority to engage in riskless principal crypto-asset transactions, which is bullish for the crypto market.
- •The guidance allowed banks to act as intermediaries by buying crypto from one customer while simultaneously selling to another without holding coins in inventory.
- •The letter capped a year of regulatory moves that systematically removed barriers to bank participation in digital asset markets.
OCC Confirms Authority for Riskless Principal Crypto Transactions
The Office of the Comptroller of the Currency (OCC) confirmed recently that national banks possessed the authority to engage in riskless principal crypto-asset transactions. Institutions can now intermediate customer trades without taking price risk or holding digital assets in inventory. Interpretive Letter 1188 established that national banks could act as principals in crypto-asset transactions with one customer while simultaneously entering offsetting transactions with another customer.
The structure positioned banks as intermediaries. They are not required to warehouse coins on their balance sheets, functioning in a capacity equivalent to that of brokers acting as agents. The guidance required banks to conduct riskless principal activities safely and soundly while maintaining compliance with applicable law. Banks remained subject to Bank Secrecy Act and anti-money laundering requirements, third-party risk management standards, and trading-book controls while executing these transactions.
The confirmation widened regulated distribution channels for crypto market activity by enabling banks to sit in the trade flow without exposure to price volatility. Banks could now intermediate customer crypto trades through their own channels, potentially tightening spreads when institutions deploy broker-style infrastructure and smoothing fiat funding and settlement for wealth management, corporate banking, and private banking clients.
2025 Regulatory Reset Removed Systematic Barriers
The December interpretive letter represented the latest step in a broader 2025 regulatory shift that systematically lowered barriers to bank participation in crypto. In November, the OCC stated that banks could hold small amounts of native tokens on their balance sheets to pay network gas fees and test permissible platforms, removing practical blockers to running custody, tokenized settlement, and on-chain operations within banking institutions.
The May guidance reaffirmed and clarified that banks could provide crypto custody and execution services for customers while outsourcing those functions to qualified third parties, including sub-custodians, subject to standard third-party risk management frameworks. The clarification codified common market setups that banks already employed in practice. In March, Interpretive Letter 1183 reset the regulatory slate by rescinding Letter 1179 and expressly reaffirming the permissibility of crypto-asset custody, certain stablecoin activities, and participation in distributed-ledger networks. The OCC framed these functions as part of, or incidental to, the business of banking rather than novel activities requiring special treatment.
Multi-Agency Coordination Lifted Procedural Frictions
The Federal Deposit Insurance Corporation scrapped its 2022 pre-clearance notice regime in March. It informed FDIC-supervised banks that they could engage in legally permissible crypto activities without prior approval, provided the risks were managed through normal examination processes. The shift moved from a de facto regulatory chill to supervision through ordinary exams.
The Federal Reserve withdrew its 2022 and 2023 crypto and dollar-token supervisory letters in April alongside two interagency risk statements. They stated the changes supported innovation while the Board monitored banks through standard supervision. The action removed bespoke hurdles for state member banks exploring stablecoin and tokenized-deposit infrastructure. In July, the Fed, OCC, and FDIC issued a joint statement reminding banks that they could offer crypto-asset safekeeping services. They are to be conducted safely and in compliance with existing rules, providing a clear acknowledgment of the activity’s place within the regulatory framework without imposing new burdens.
Market Structure Implications for Liquidity and Settlement
The combined effect of the year’s regulatory moves created clearer authority for banks to custody, execute, intermediate, and operate on-chain infrastructure, including network fee payments. The removal of pre-clearance frictions at the FDIC and Fed lowered legal uncertainty and operational overhead for banks connecting to crypto settlement and tokenized payment systems.
The riskless principal authorization allowed banks to enter the crypto trade flow as matched-principal routers for spot transactions without warehousing price risk. Banks maintained requirements to offset exposure immediately to preserve the riskless nature of transactions, keeping activities within existing risk management frameworks. The near-term volume impact appeared incremental, but the medium-term effect normalized banks as legitimate intermediaries in crypto prices and spot flow routing. The structure moved more volume onto supervised rails.
It potentially deepened liquidity by enabling traditional financial institutions to deploy established broker-dealer infrastructure for digital asset transactions. The regulatory clarity positioned US banks to offer bank front ends with crypto execution operating behind customer interfaces. This would integrate digital asset access into existing wealth management and corporate banking relationships without requiring separate exchange accounts or introducing balance sheet crypto exposure.