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.

The Office of the Comptroller of the Currency (OCC) is taking action against a former bank employee who allegedly stole millions of dollars from customer accounts.

The OCC says it’s issuing an order of prohibition against William Shane Garrow, the former senior vice president of private banking for a subsidiary of BOK Financial in Tulsa, Oklahoma.

Says the OCC,

“Between approximately March 17, 2021 and March 12, 2024, respondent misappropriated approximately $3,437,536 from multiple customers’ accounts under the bank’s custody for his personal benefit, without the customers’ knowledge or authorization.”

According to the OCC, Garrow engaged in unsafe and unsound practices and violations of law that resulted in significant losses for the bank.

The regulator has now banned Garrow from working at insured depository institutions, including banks and credit unions. The former bank executive is consenting to the issuance of the order without admitting or denying the OCC’s findings.

The OCC action comes after Garrow pleaded guilty to bank fraud and willfully making and subscribing a false Federal income tax return. Garrow was sentenced last month to 71 months in prison. He was also ordered to pay $3.86 million in restitution and $1.519 million to the IRS.

Prosecutors said Garrow directed fraudulent wire transfers and cashier’s checks from at least 16 client accounts to entities and bank accounts that he controlled. If a client asked about the transactions, Garrow blamed it on a banking error and would return the funds stolen or transfer money from another victim’s account.

Said US Attorney Clint Johnson last month,

“Garrow deceived people for over 12 years, and his actions wreaked havoc on banking personnel who were tasked with correcting his wrongs. This was not a simple banking error or an accident, but rather a criminal scheme. Garrow abused the trust given to him by the bank and its customers.”

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American national banks are now legally allowed to buy and sell crypto on behalf of their customers. The ruling was made on Wednesday in the form of a revised interpretive letter from the Office of the Comptroller of the Currency (OCC), eliminating previous regulatory hurdles and allowing banks to go ahead with digital asset services.

Banks Permitted To Provide Full Crypto Services

Under the OCC guidance, federal savings associations and national banks may now offer the full array of crypto services. That would encompass buying and selling digital assets, converting them into US dollars, making settlements, maintaining customer records, and even supporting asset valuations and tax reporting.

These services may be managed either by the banks themselves or in collaboration with third-party providers. But in both instances, the OCC was unambiguous: banks need to have robust internal controls and risk management procedures.

First page of the OCC Interpretive Letter. Source: OCC

The new guidance also indicates a broader change in the way US regulators are thinking about crypto. On March 7, the OCC eliminated a rule that had compelled banks to obtain supervisory non-objection before making a foray into digital currencies.

Then on April 24, the Federal Reserve backtracked on its 2022 policy mandating state member banks to provide prior notice before becoming involved in crypto activities. According to Faryar Shirzad, Coinbase’s Chief Policy Officer, this new direction brings more clarity. He also credited Acting Comptroller Rodney Hood with assisting to advance it.

Enormous thanks to Acting @USOCC Comptroller Rodney Hood for further clarifying that national banks can provide a full range of crypto services. We appreciate Comptroller Hood’s commitment to regulatory clarity, as well as his adherence to supervisory best practices and the… pic.twitter.com/i1MyKc4T1I

— Faryar Shirzad (@faryarshirzad) May 7, 2025

Banks Must Act On Customer Direction

The OCC’s letter also makes it clear that banks can act on a customer’s instruction. So if one holds crypto with their bank and wishes to sell the crypto, then the bank can execute the transaction directly. This enhances customers’ control and paves the way for easier crypto transactions using well-known banking conduits.

This explanation is based on previous guidance from the OCC, but now eliminates any uncertainty. Banks are not required to wait for special approval to provide these services, which may accelerate adoption.

As of today, the market cap of cryptocurrencies stood at $3.23 trillion. Chart: TradingView

Risk Oversight Rules For Outside Providers

The OCC guidance also establishes requirements for how banks are to deal with third-party crypto service providers. In the event that banks outsource activities such as crypto custody or transaction facilitation, due diligence needs to be conducted and oversight instituted.

Image: FIU Business

Sub-custodians, especially, need to adhere to security protocols to safeguard customer assets. Banks are expected by the OCC to hold such partners to the same standards they apply in other banking segments. Risk frameworks need to be consistent with current regulations to safeguard customers from possible mishandling.

Crypto’s Path Into The Banking Mainstream

This announcement is a strong message that crypto is no longer taboo for mainstream banks. By providing banks with more latitude to engage without the need for prior approval, the OCC is signaling a more embracing attitude toward digital asset services within regulated finance.

Whether that leads to a flood of banks into the business is uncertain. But the guidelines are in place, the door is open, and customers can now choose to get crypto services from the same banks where they hold their checking accounts.

Featured image from The Information, chart from TradingView

Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.

A top US regulator’s recent easing of its stance on crypto doesn’t mean that the US government’s crusade against the industry is over, according to Custodia Bank CEO Caitlin Long.

Late last week, the Office of the Comptroller of the Currency (OCC) announced that banks in the US could now go ahead with a range of crypto services, including custody and certain stablecoin activities.

Said Acting Comptroller of the Currency Rodney E. Hood,

“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. I will continue to work diligently to ensure regulations are effective and not excessive, while maintaining a strong federal banking system.”

However, Long says that Operation Choke Point 2.0 – a term commonly used to describe the US government’s covert agenda to stifle the crypto industry – isn’t over unless two other US regulators abandon their unfriendly stance on digital assets.

Last December, a Freedom of Information Act (FOIA) request by the crypto exchange Coinbase found dozens of instances where the Federal Deposit Insurance Corporation (FDIC) asked banks to freeze crypto-related services.

Long also calls upon the Fed to allow Custodia – a prominent digital asset custody bank – to have a master account, or a bank account that financial institutions hold directly with the Federal Reserve.

Says Long,

“AMID ALL THE JUBILATION ABOUT the OCC news, Operation Choke Point 2.0 (OCP 2.0) isn’t over until:
1. Fed and FDIC also rescind their anti-crypto guidance, which is still in effect (Fed & FDIC were far more detrimental to crypto banking than OCC) and

2. Custodia Bank has its Fed master account.

Context: banks that wanted to serve crypto but got regulatory pressure not to (OCP 2.0) were mostly Fed and FDIC-regulated banks, not OCC-regulated. OCC’s move is a big positive an has implications on the other two agencies, but FDIC and Fed anti-crypto guidance is still in effect.“

The House Committee on Oversight and Government Reform recently requested access to unredacted documents from the FDIC to investigate allegations that banks were deliberately de-banking the crypto industry.

The FDIC has not formally answered the request.

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