The Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (Fed), and the Federal Deposit Insurance Corporation (FDIC) released a joint statement explaining how existing banking rules apply when institutions custody crypto for customers. 

The guidance describes “safekeeping” as the act of holding a digital asset on a client’s behalf and stresses that it does not create new supervisory demands.

Risk control centers on cryptographic keys

Regulators instructed boards and executives to view crypto custody as a service that relies on exclusive control of private keys and other sensitive data. They note that a bank must prove no other party, even the customer, can unilaterally move an asset once it enters custody. 

Management must assess how key-generation tools, wallet types, and contingency plans align with the institution’s broader control environment and ensure that staff possess the necessary technical skills to maintain these safeguards.

The statement also told banks to weigh the volatility of the asset class and the rapid pace of technological change when allocating capital and staffing for custody operations. 

The agencies said sound programs include continuous reviews of each supported token’s software dependencies and ledger design to spot vulnerabilities that could threaten safety and soundness.

Compliance, governance, and third-party oversight

The three agencies reminded institutions that crypto custody must satisfy Bank Secrecy Act, anti-money laundering, counter-terrorism financing, and Office of Foreign Assets Control rules, including the “travel rule” that attaches identifying information to transfers. 

Boards must involve the BSA officer and senior managers early in any custody rollout to gauge illicit-finance exposure and document controls. 

Additionally, banks that delegate storage to sub-custodians remain responsible for the performance of those vendors. The guidance instructed firms to examine a sub-custodian’s key management methods, segregation of assets, and insolvency protections before signing contracts.

Firms will also be required to build notice requirements for any breach or operational event. Institutions that keep assets in-house but buy third-party software must apply the same vendor-risk disciplines. 

Finally, the agencies requested that auditors expand their testing to include crypto-specific elements, such as key generation, wallet security, and on-chain settlement controls. 

When internal teams lack expertise, management should hire independent specialists to validate safeguards and report directly to the audit committee.

The joint statement concluded that existing fiduciary, custody, and information security regulations already provide a framework for banks that wish to safeguard their crypto.

However, those banks must demonstrate that they can control keys, manage vendors, and comply with federal financial crime statutes in real time.

US banks are now saddled with $413.2 billion in unrealized losses on their balance sheets.

In its new Quarterly Banking Profile for the first quarter of 2025, the Federal Deposit Insurance Corporation (FDIC) says US banks reported a $67.5 billion decrease in unrealized losses on securities, primarily Treasuries and other bonds.

Although it looks like progress, the FDIC warns the decrease has likely already reversed amid extreme bond market volatility and a surging Treasury yield curve.

“Longer-term interest rates such as the 30-year mortgage rate and the 10-year Treasury rate decreased in the first quarter, increasing the value of securities reported by banks and lowering unrealized losses.

However, increases in longer-term interest rates since the end of the first quarter would likely reverse most of these improvements in unrealized losses if measured today.”

Rebel Cole, who worked in the Federal Reserve System for ten years, tells Fortune that today’s levels of unrealized losses represent a serious ongoing danger for lenders.

“All it takes is one bad news story about any of these banks, and we could have another banking crisis like we had in March of [2023].

I’m amazed we haven’t had one since then.”

Unrealized losses represent the difference between the price banks paid for securities and the current market value of those assets.

Concern over such paper losses played a major role in the collapse of Silicon Valley Bank in 2023, as depositors panicked and withdrew funds after learning the bank sold securities at a steep loss to cover liquidity needs.

The FDIC says banks recorded a $180.9 billion rise in domestic deposits in Q1, which is about 1%, and a $3.8 billion increase in net income to $70.6 billion, with a reserve coverage ratio declining from 179.9% to 168.8%.

Follow us on X, Facebook and Telegram

Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox

Check Price Action

Surf The Daily Hodl Mix

&nbsp

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Generated Image: Midjourney

The US banking industry saw a rise in profits in the first quarter of the year driven by a jump in non-interest income, according to new government numbers.

In an announcement from the Federal Deposit Insurance Corporation (FDIC), the agency says that financial institutions in the US reported a return of 1.16% and net income of $70.6 billion.

The FDIC says the rise in income was a jump of $3.8 billion, or 5.8%, from the previous quarter.

Says FDIC Acting Chairman Travis Hill,

“With strong capital and liquidity levels to support lending and protect against potential losses, the banking industry continued to support the country’s needs for financial services while navigating the challenges presented by economic uncertainty, elevated inflation and interest rates, tighter credit, and elevated unrealized losses.”

Earlier this month, market intelligence giant S&P Global reported that the top four US banks have seen their assets grow in the past three months by a whopping $681.71 billion.

S&P Global says that the combined assets of JPMorgan Chase, Bank of America, Citibank and Wells Fargo ballooned by 5.9%, or $681.71 billion, in the first quarter of the year.

The massive asset growth is in stark contrast to “a 2.9% contraction in the previous quarter.”

“JPMorgan Chase & Co., the biggest US bank at $4.358 trillion in total assets as of March 31, reported an increase of $355.04 billion in assets in the first quarter. That marked the third-highest sequential increase among the nation’s 50 largest banks at 8.9%.

Citigroup Inc. posted the second-highest sequential growth at 9.3%, or an increase of $218.57 billion in assets.

Bank of America Corp. reported asset growth of 2.7% from the prior quarter, while Wells Fargo & Co.’s assets increased 1.1% in the same period.”

Follow us on X, Facebook and Telegram

Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox

Check Price Action

Surf The Daily Hodl Mix

&nbsp

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Generated Image: DALLE3

Coinbase’s legal representatives say the U.S. Federal Deposit Insurance Corporation (FDIC) hasn’t been cooperating with Freedom of Information Act (FOIA) requests.

Coinbase has been attempting to leverage FOIA to uncover instances of the FDIC asking banks to freeze crypto services, known as “pause letters,” but the top US crypto exchange says the regulator hasn’t been complying with its information requests.

Paul Grewal, Coinbase’s chief legal officer, claims the pause letters were part of “Operation Choke Point 2.0,” an alleged attempt by Biden Administration government regulators to stifle the crypto industry.

The exchange hired the law firm History Associates, which filed a motion in January asking a federal court to intervene.

The following month, the court paused the FDIC’s deadline to respond to History Associates’ amended FOIA complaint “so that the parties could engage in a biweekly, informal information-sharing process,” according to the law firm.

Coinbase’s legal representation has requested information regarding the FDIC’s response to its FOIA requests, specifically concerning the regulator’s policy or practice of “failing to conduct complete searches of all relevant databases and failing to take adequate steps to preserve responsive documents.”

In a new motion filed this week, History Associates now says the FDIC is “unwilling to cooperate” with these FOIA requests.

“The only viable path forward is for the case to resume and proceed to litigation of the merits.”

Last month, the FDIC released redacted documents related to its supervision of crypto-related activities, which include pause letters sent to 24 banks as well as communications and records involving other regulated institutions.

House Oversight Committee Chairman James Comer (R-KY) subsequently sent a letter to FDIC Acting Chairman Travis Hill requesting unredacted copies of the documents.

Follow us on X, Facebook and Telegram

Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox

Check Price Action

Surf The Daily Hodl Mix

&nbsp

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Generated Image: Midjourney

The Federal Deposit Insurance Corporation (FDIC) issued new guidance on March 28 clarifying that FDIC-supervised banks may engage in crypto-related activities without first obtaining the agency’s approval, provided they manage the associated risks by safety and soundness standards.

The announcement, published as Financial Institution Letter (FIL-7-2025), rescinds FIL-16-2022 and marks a significant policy shift for the agency. 

Acting Chairman Travis Hill stated:

“With today’s action, the FDIC is turning the page on the flawed approach of the past three years. I expect this to be one of several steps the FDIC will take to lay out a new approach for how banks can engage in crypto- and blockchain-related activities in accordance with safety and soundness standards.”

The FDIC said it will continue working with the President’s Working Group on Financial Markets to issue additional guidance and coordinate with other regulatory agencies to replace prior interagency documents on digital assets.

The Executive Director of the Presidential Working Group on Digital Assets Markets, Bo Hines, called the decision “a huge step forward toward innovation and adoption.”

The agency’s decision reflects a broader effort to reset its approach to financial innovation. 

‘Pause’ letters

In recent years, several banks pursuing digital asset activities reportedly received informal “pause” letters instructing them to halt engagement with crypto services, including custody, tokenized deposits, and even basic retail crypto offerings.

Crypto industry figures said these decisions were a part of “Operation Chokepoint 2.0,” an alleged effort by former President Joe Biden’s administration to hinder the crypto industry’s growth in the US.

Hill has criticized the actions for lacking transparency and contributing to a perception that the FDIC discouraged innovation through non-public enforcement tactics.

In a January speech, he acknowledged that the agency had failed to offer banks clear public guidance, opting instead for ad hoc interventions. 

He cited the over 20 cases where banks had received letters asking them to stop or delay crypto-related activities without formal rulemaking or open comment periods.

Call to reevaluate

Hill emphasized that compliance with the Bank Secrecy Act should not be used as a pretext for denying access to banking services and called for a reevaluation of how the BSA is implemented across financial institutions.

Recent internal discussions at the FDIC haven reortedly focused on allowing banks to pursue tokenized deposit services and other blockchain-based financial infrastructure without unnecessary regulatory delays.

The move brings the FDIC into closer alignment with other regulators, such as the US Securities and Exchange Commission (SEC), which has begun formalizing crypto regulatory frameworks.

It also comes amid growing pressure from industry participants and lawmakers for banking regulators to provide a consistent, transparent roadmap for lawful crypto-related services.

Mentioned in this article