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Introduction: Why This Regulatory Deregulation Matters
Recently the Federal Reserve (FRB) and a couple of other U.S. bank regulators — the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), for instance — quietly but considerably changed course regarding a series of crypto-related regulatory guidelines.
These steps can be viewed as the beginning of a new, open age of regulation for U.S. banks that are venturing into crypto-asset business.
For bank corporate customers, fintech companies, and crypto firms, these changes open up new opportunities for secure and compliant participation in the digital asset economy.
Here, you will discover what's new, what banks are now able to do in the crypto arena, and what it all implies for financial services.
What Was Withdrawn or Repealed?
The most significant development was the withdrawal or rescission of several key guidance documents and policy statements that had previously imposed guardrails on bank involvement with crypto assets.
These include:
1. Joint Agency Crypto Risk Statements
The Fed, OCC, and FDIC rescinded:
- Joint Statement on Crypto-Asset Risks to Banking Organizations (Jan 2023)
- Joint Statement on Liquidity Risks from Crypto Markets (Feb 2023)
These statements had emphasized systemic crypto risks, such as fraud and volatility, discouraging banks from engaging extensively with the industry.
2. Federal Reserve Supervisory Letters
The Fed withdrew:
- SR 22-6 on crypto-asset activities
- SR 23-8 on dollar token activities
These supervisory letters required banks to obtain formal “nonobjection” letters from the Fed before engaging in any crypto activities, which is a major regulatory burden and many banks viewed as a de facto ban.
3. OCC Interpretive Letter 1179 (Rescinded in March 2025)
This letter had clarified a supervisory process for crypto activities but also made such activities contingent on case-by-case approval. Its rescission by OCC Interpretive Letter 1183 signals a shift back to a more permissive, risk-based supervisory model.
What Hasn’t Changed and What U.S. Banks Can Now Legally Do with Crypto
While the prior restrictions as above mentioned have been rolled back, the following OCC interpretive letters remain effective and still form the regulatory basis for U.S. banks to engage in crypto activities.
- OCC Interpretive Letter 1170 (July 2020)
- OCC Interpretive Letter 1172 (Sept 2020)
- OCC Interpretive Letter 1174 (Jan 2021)
As a result, U.S. national banks and federal savings associations can now more freely engage in, subject to general risk management and compliance expectations, certain crypto-related activities.
1. Crypto Custody Services
Banks can provide custodial services for digital assets, including:
• Safekeeping of customers’ cryptographic keys
• Recordkeeping and reporting services
• Trade execution and settlement
• Valuation, tax, and audit support
Banks may offer these services in either fiduciary or non-fiduciary capacities. This means they can hold digital assets as trustees (if chartered to do so) or simply as custodians, similar to how they manage traditional securities.
This provides institutional-grade custody for crypto—something increasingly demanded by asset managers, family offices, and high-net-worth individuals entering the space.
2. Stablecoin Reserve Services
Under OCC Interpretive Letter 1172, banks may hold U.S. dollar reserves backing fiat-backed stablecoins—as long as the stablecoin is:
• Backed 1:1 by fiat currency
• Redeemable upon request
• Held in a hosted wallet environment
This would enable partnerships between banks and stablecoin issuers, supporting safer and more transparent stablecoin ecosystems.
3. Payments and Network Participation
Thanks to OCC Interpretive Letter 1174, banks are now allowed to directly participate in blockchain networks. That means they can act as nodes in distributed ledger systems—the same kind of networks that power stablecoins and blockchain-based payments.
In practical terms, this gives banks the ability to:
- Join real-time payment networks built on blockchain
- Send and receive payments using stablecoins or other digital tokens tied to the U.S. dollar
- Help customers move money across borders faster and with fewer intermediaries
This is a big shift. It means banks can now operate within modern, programmable payment infrastructures that have typically been dominated by crypto-native platforms. Whether it’s for B2B settlements or retail transactions, banks are no longer stuck on legacy rails—they can offer faster, more flexible payment solutions built on blockchain.
4. Exchange and Settlement Support
Banks can now play a more active role in helping crypto and fiat currencies move smoothly between each other. That includes offering services like:
• Helping institutional clients convert between crypto and U.S. dollars (what people often call “on-ramps” and “off-ramps”)
• Acting as a trusted middleman for settling trades involving digital assets
• Providing sub-custody services—basically, holding crypto on behalf of platforms like exchanges or investment firms
In simple terms, banks can now serve as secure, regulated bridges between the crypto world and traditional finance. This gives institutions a safer and more compliant way to handle digital assets, backed by the trust and protections of a licensed financial institution.
What This Means for Crypto Companies and Customers
These regulatory changes aren't just giving banks more latitude—they're changing the game for the entire crypto ecosystem in America.
With more crypto activity now officially on the list of things that are legal for banks, financial institutions can become stable and reputable infrastructure providers for digital assets. This opens enormous opportunities for crypto startups, fintech companies, institutional investors, and even ordinary consumers.
For crypto startups, it will be easier to work with regulated banks. Instead of relying on lightly regulated trust companies or offshore institutions, startups that issue stablecoins or tokenized assets can now engage with U.S. banks to custody fiat reserves, settle transactions, or serve as custodians. That means quicker growth, better fiat access, and a safer offering.
Fintech and payment companies can now plug into banks that are legally allowed to run blockchain-based payment systems. If your platform needs real-time settlement using stablecoins or is building crypto features into a financial product, you now have more options—and stronger partners—to help make that happen.
Institutional investors and asset managers will also benefit. Large funds have mostly stayed on the sidelines, citing issues with custody, compliance, and counterparty risk. Now, with the potential for banks to provide insured custody and oversight, institutions can engage in the crypto market with more confidence, while still meeting their fiduciary and regulatory responsibilities.
Even consumer users and businesses can gain. If your bank starts to offer crypto-related services like custody, stablecoin payments, or savings accounts, you can access crypto through a familiar and trusted provider. For businesses, especially those with international operations, stablecoins paired with regulated bank backing could mean much faster and cheaper international payments.
In short: banks can now bridge the gap between traditional finance and crypto—and that changes everything. It makes the ecosystem safer, more credible, and more usable for everyone involved.
Key Takeaways
1. Less burden, but not gone.
Banks no longer need to get prior approval from regulators to offer crypto services. But that doesn’t mean a free pass. They still need to show that their crypto activities are safe, well-managed, and fully compliant with laws around consumer protection, AML, and cybersecurity.
2. Banks finally have clear rules to follow.
The updated guidance confirms that banks can legally offer crypto custody, hold stablecoin reserves, and process payments on blockchain networks. This kind of legal clarity gives them the confidence to move forward—and gives their partners clarity too.
3. Expect more banks to get involved.
Now that the rules are clearer and the red tape is lighter, more banks—especially regional and digitally minded ones—will start offering crypto-related services. That means more choices for startups, platforms, and investors looking for banking partners.
4. New partnerships will emerge.
With the legal framework now in place, crypto companies and fintechs can build deeper, more meaningful relationships with banks—whether it’s for custody, settlement, or payments. Expect more integrations and embedded finance offerings to follow.
5. Washington is signaling support for innovation.
The White House’s Executive Order 14178 shows that U.S. policymakers want to promote stablecoin growth, support blockchain innovation, and push back on the idea of a U.S. central bank digital currency (CBDC). That’s a clear green light for the private sector to lead.
What Should Industry Players Do Now?
Whether you’re a bank, fintech startup, or crypto-native company, these changes are a major turning point. But taking advantage of them requires thoughtful planning—not just excitement.
Read the significant OCC interpretive letters.
Letters 1170, 1172, and 1174 are now the foundation of what is possible for banks to do legally in the crypto space. If you are at a bank, time to return to your policies and make sure your roadmap is in compliance with these regulations. And if you are a fintech or crypto company, understanding these letters will enable you to have more successful bank partnerships.
Strengthen your compliance game.
Just because the rules are more open doesn’t mean regulators aren’t watching. Any business touching crypto—especially those partnering with banks—needs strong AML/KYC practices, secure systems, and solid risk management. Compliance is no longer a barrier—it’s a differentiator.
Revisit your strategy.
If your team hit pause on a crypto initiative due to past uncertainty, now’s the time to reconsider. Whether it’s launching a stablecoin product, offering crypto payments, or building new wallet infrastructure, the regulatory climate is much more favorable today.
Keep an eye on what’s coming next.
A new interagency working group, created under Executive Order 14178, will be setting further guidance throughout 2025. They’ll be tackling issues like stablecoin regulation, interoperability, and access to payment systems. Staying ahead of this will give you a real advantage—and maybe even a voice in shaping what’s next.
In short: this is a real moment of opportunity. If you move early, plan smart, and align with the right partners, you’ll be in a strong position to lead as crypto and traditional finance finally start to converge.
What These Changes Signal for the Future of Finance
These regulatory updates aren’t just about rule changes—they point to something bigger: a fundamental shift in how money moves and how the financial system is being rebuilt for the digital age.
Banking rails are becoming programmable.
Banks can now connect directly to blockchain-based payment systems. This unlocks things like real-time transfers, automated transactions through smart contracts, and the use of tokenized dollars instead of traditional payment rails. No more waiting days for wire transfers—this is faster, cheaper, and more efficient finance.
Stablecoins are going mainstream.
We’re entering a world where more U.S. dollar-backed stablecoins are supported—or even issued—by regulated banks. These tokens won’t just be for crypto insiders. They’ll start powering things like payroll, cross-border payments, B2B settlements, and online shopping. With trusted banks behind them, stablecoins will feel less risky—and more like everyday money.
Traditional and crypto systems are merging.
Fintechs and digital asset companies can now build products that sit across both old and new systems. Think of wallets that connect directly to a user’s bank account, or apps that let people switch between stablecoins and fiat with one tap. That kind of seamless experience is now possible—and legal.
Banks that understand crypto will become key partners.
Much like how businesses today choose cloud providers based on reliability and tech capabilities, they’ll soon choose banking partners based on crypto fluency. Banks that can support tokenization, smart contracts, and custody will become the new infrastructure layer for tomorrow’s financial products.
Most importantly: adoption is going to speed up.
With fewer legal and compliance roadblocks, financial institutions now have the green light to move forward. That will pull in businesses, investors, and users who were previously on the sidelines. Crypto isn’t just running parallel to traditional finance anymore—it’s becoming part of it.
If you’re in a traditional business and haven’t yet thought about how your customers or partners might want to move money in the next year or two—now’s the time to start. Those who prepare early will have a clear advantage as the financial world continues to evolve.
Looking Ahead: What Comes Next?
The rollback of these restrictions is just the beginning. With Executive Order 14178 and the creation of a new Presidential Working Group on Digital Assets, the U.S. is laying the foundation for a more innovation-friendly legal framework.
We expect more updates from regulators like the OCC, Federal Reserve, SEC, and CFTC throughout 2025—touching on stablecoins, payments, tokenized assets, and more. But the overall direction is clear: banks, fintechs, and crypto companies are no longer being sidelined—they’re being invited to help build the next era of finance.
Stay Compliant. Stay Ahead.
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