US Banks Can Finally Custody Crypto, Regulators Confirm

The OCC, FDIC, and Federal Reserve released a joint statement today, explicitly giving banks permission to custody clients’ crypto. Several regulators have tried to enact this policy independently, and the rule is even clearer today.

However, this comes with a few caveats, as the regulators repeatedly tried to emphasize consumer protection. Most importantly, banks are explicitly forbidden from letting their clients have keys to these custody mechanisms.

Crypto Enters a New Era in US Banking

Sweeping new pro-crypto attitudes have permeated the federal regulatory apparatus, bringing a wide range of changes.

However, lingering confusion can still delay prominent wins, and agencies sometimes lose their battles. Today, three federal financial regulators have united to release a statement, confirming that banks can custody crypto:

These three agencies, the OCC, FDIC, and Federal Reserve, have each made several moves to clarify banks’ relationship to crypto in recent months.

The OCC, for example, attempted to explicitly confirm these custody rules in May. Before this, the FDIC exposed documents related to crypto debanking, changing rules to prevent future abuses.

Even the Federal Reserve, which has recently clashed with Trump, has also worked to bridge the gap between banks and crypto. It removed reputational risk guidelines that strongly discouraged TradFi institutions away from the industry.

In short, many of the biggest regulators all want this rule change. The SEC, which did not sign today’s statement, also approved similar language in January. Today, however, these three agencies came together to make their positions even more explicit:

“Banking organizations may provide safekeeping for cryptoassets in a fiduciary or a non-fiduciary capacity. A banking organization… has the authority to manage [cryptoassets] in the same way banking organizations manage other assets they hold as fiduciaries,” the agencies’ statement reads.

So, what does this actually mean? Simply put, these regulators are doing everything to reassure banks that they can freely engage with crypto custody.

The statement provides a few general guidelines to ensure maximum consumer protection, such as conducting audits, maintaining regulatory compliance, deploying proper cybersecurity, etc.

However, these agencies were firm on one point that may frustrate some community members. If a bank custodies your crypto, it’s the primary custodian.

When these institutions hold assets, they bear all the liability. In other words, a bank cannot allow a client to directly access their own account’s private keys under any circumstances.

Still, this is a small workaround. Many crypto enthusiasts are particularly determined to maintain self-custody over their assets, but these people might not give their tokens to a bank in the first place. Most customers will simply regain their assets as soon as the bank processes the transfer request.

That is to say, these regulators aren’t completely taking a laissez-faire approach. Their statement repeatedly emphasized banks’ need to maintain compliance and security, even imposing new rules.

The federal government is willing to experiment with bank-custody crypto but maintains rigorous standards.