The Office of the Comptroller of the Currency (OCC) clarified on May 7 that federally chartered banks and savings associations may offer crypto services, namely custody and execution, including through third-party providers, provided they adhere to sound risk management practices and legal compliance. 

The clarification, issued through Interpretive Letter 1184, confirms and expands on earlier guidance related to crypto activities.

The OCC stated that institutions may buy and sell assets held in custody at the customer’s direction and outsource crypto-asset functions, including custody and trade execution services, to third parties. 

These activities remain subject to the same oversight and operational standards applied to traditional financial services, including due diligence, third-party risk management, and cybersecurity protocols.

The letter builds on prior OCC guidance outlined in Interpretive Letters 1170 and 1183. It also reinforces the regulator’s view that digital asset services can fall within the scope of permissible banking activities when conducted safely and in compliance with applicable regulations.

Regulatory context and policy shift

The clarification follows a policy change first announced by the OCC on March 7, which removed the requirement for prior regulatory approval for certain crypto-related activities.

That earlier announcement departed from previous supervisory practices under former President Joe Biden’s administration, when banks needed to notify examiners and receive a letter of no objection before engaging in crypto services.

In its March update, the OCC confirmed that national banks may engage in crypto-asset custody and stablecoin activities and even participate as validators on distributed ledger networks. 

The updated guidance effectively reversed previous cautionary statements and removed procedural hurdles, allowing banks to incorporate crypto services into their operations without seeking advance approval.

At the time, acting comptroller of the currency Rodney Hood said the OCC aimed to streamline oversight while maintaining high safety standards. 

Reinforcing permission

The May 7 letter builds on that policy foundation, formally integrating execution services and sub-custodian relationships into the scope of authorized activity.

The OCC reiterated that institutions must manage associated risks, whether they handle crypto services internally or through third parties.

Interpretive Letter 1184 reaffirms the permission to federally regulated banks to engage with digital assets in a custodial capacity, provided these activities are executed with appropriate safeguards and in compliance with federal banking law. 

The OCC’s updated position affirms crypto services as permissible under existing authorities and signals continued regulatory normalization of digital asset services within the US banking sector.

A federal judge agreed to pause an ongoing lawsuit between 18 state attorneys general and a decentralized finance lobbyist group against the U.S. Securities and Exchange Commission (SEC) on Wednesday, after the parties noted the SEC’s new leadership.

The state AGs, all Republicans, filed the lawsuit alongside the DeFi Education Fund last November after Donald Trump’s win in the 2024 presidential election. They allege that the federal securities regulator had exceeded its authority in filing lawsuits against crypto exchanges. In Wednesday’s filing, the SEC suggested that Paul Atkins’ confirmation as the new agency chair could end the litigation.

“As support, the Defendants state that due to a leadership transition in the Securities and Exchange Commission, this case could potentially be resolved,” the filing said.

The judge ordered the parties to file a joint status report within 30 days but paused all deadlines for 60 days.

Originally, the lawsuit argued that the SEC’s enforcement actions were intruding on state regulators’ abilities to police digital asset firms within their own borders.

“Some States, for instance, have enacted regulatory regimes for financial institutions focused on digital assets; others have required digital asset platforms to obtain money-transmitter licenses and security bonds to guarantee liquidity,” the lawsuit said.

“While state regulatory approaches have varied in accordance with local needs, they have consistently endeavored to provide transparent and administrable rules of the road. And Congress has repeatedly declined proposals to give federal agencies broad regulatory power over digital assets.”

Congress is expected to pick up market structure legislation that may address federal regulators’ roles in overseeing crypto this year, and key committees have already begun holding hearings.

In the meantime, the SEC has already dropped investigations and lawsuits into more than a dozen companies and paused lawsuits against a few others.

IRS broker rule

A separate lawsuit filed by the DeFi Education Fund, the Texas Blockchain Council and the Blockchain Association against the Internal Revenue Service was also dropped on Wednesday. This lawsuit argued that the IRS’ DeFi broker rule went beyond the agency’s authority.

Trump signed a joint House and Senate resolution under the Congressional Review Act nullifying this rule last week — the first legislative item addressing crypto that he signed as president.

In a filing Wednesday, the parties said the lawsuit had become “moot” after Trump’s signing the resolution.