U.S. regulator greenlights banks for crypto activities, reversing 2021 restrictions

By willowt // 2025-03-12

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On March 7, the U.S. Office of the Comptroller of the Currency (OCC) announced that banks can now engage in cryptocurrency-related activities, reversing its 2021 policy that imposed stricter oversight. This marks a significant step toward mainstream adoption of digital assets in traditional banking.
The OCC’s new guidance allows banks to hold cryptocurrency assets, manage stablecoin reserves and participate in distributed ledger networks without prior regulatory approval. Banks must maintain robust risk management controls similar to those used for traditional banking activities.
The decision rescinds the 2021 policy that required banks to notify regulators and obtain approval before engaging in crypto activities. This shift reflects growing acceptance of cryptocurrencies as a legitimate financial asset class, despite past concerns about volatility and risks.
The OCC’s move bridges traditional finance and the crypto ecosystem, enabling banks to streamline payments, reduce costs and enhance transparency. It also supports the integration of stablecoins, which are increasingly used for transactions and remittances.
While the decision fosters innovation, challenges remain, including cryptocurrency volatility, fraud and inconsistent regulatory oversight across agencies. The move aligns with global trends toward crypto acceptance but highlights the need for a cohesive regulatory framework to balance innovation and risk management.

In a landmark move that signals a shift in the regulatory landscape for cryptocurrencies, the U.S. Office of the Comptroller of the Currency (OCC) announced on March 7 that banks are now permitted to engage in certain cryptocurrency-related activities. This decision reverses a 2021 policy that imposed stricter oversight on banks venturing into the crypto space, marking a significant step toward mainstream adoption of digital assets in the traditional banking system. The OCC’s latest guidance allows banks to hold cryptocurrency assets, manage reserves for stablecoins and participate in distributed ledger networks without requiring prior approval from regulators. Acting Comptroller of the Currency Rodney E. Hood emphasized that banks must maintain robust risk management controls, akin to those used for traditional banking activities. “The OCC expects banks to have the same strong risk management controls in place to support novel bank activities as they do for traditional ones,” Hood stated. “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.”

A rollback of 2021 restrictions

The OCC’s decision to rescind its 2021 policy is a pivotal moment for the banking sector. That year, the regulator had mandated that banks notify their supervisory offices and obtain approval before engaging in crypto-related activities. Supervisors were required to evaluate a bank’s systems to ensure they could safely conduct such activities. This cautious approach reflected broader regulatory concerns about the volatility and risks associated with cryptocurrencies. In 2023, the OCC, alongside the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC), issued a joint statement warning banks about the risks posed by crypto-asset market vulnerabilities, including liquidity concerns. However, the OCC’s latest move signals a departure from this stance, aligning with the growing acceptance of cryptocurrencies as a legitimate financial asset class.

A rocky road for crypto regulation

The OCC’s evolving stance on cryptocurrencies has been a rollercoaster ride. In 2020, under the Trump administration, the regulator issued a series of interpretive letters that opened the door for banks to provide services to crypto firms, hold reserves for stablecoin issuers and use blockchain technology for payment activities. These actions were seen as a nod to the burgeoning crypto industry. However, the regulatory environment shifted in 2021, when the OCC introduced stricter oversight, requiring banks to demonstrate they could manage crypto activities in a “safe and sound manner.” This move was met with criticism from the crypto community, which argued that excessive regulation stifled innovation. The Biden administration further complicated matters by maintaining a cautious approach, with the OCC rescinding some of its earlier pro-crypto guidance. The latest announcement, however, suggests a renewed willingness to embrace the potential of digital assets while ensuring robust oversight.

Implications for the banking sector

The OCC’s decision is expected to have far-reaching implications for the banking industry. By allowing banks to hold crypto assets and manage stablecoin reserves, the regulator is effectively bridging the gap between traditional finance and the crypto ecosystem. Stablecoins, which are cryptocurrencies pegged to stable assets like the U.S. dollar, have gained traction as a reliable medium for transactions and remittances. The OCC’s endorsement of stablecoin activities could pave the way for greater integration of these digital assets into the mainstream financial system. Moreover, the ability to participate in distributed ledger networks — the technology underpinning cryptocurrencies — could enable banks to streamline payment processes, reduce transaction costs and enhance transparency.

A broader trend toward crypto acceptance

The OCC’s announcement comes amid a broader trend of increasing acceptance of cryptocurrencies. President Donald Trump, a vocal advocate for digital assets, recently signed an executive order establishing a strategic bitcoin reserve. The reserve will reportedly be funded using bitcoin seized from criminals, a move that underscores the growing recognition of bitcoin as a store of value akin to gold. The OCC’s decision also aligns with global efforts to regulate and integrate cryptocurrencies into the financial system. Countries like Switzerland, Singapore and Japan have already implemented frameworks to support crypto innovation while mitigating risks.

Challenges ahead

While the OCC’s latest guidance is a positive development for the crypto industry, challenges remain. Cryptocurrencies are still highly volatile, and regulatory clarity is needed to address concerns about fraud, money laundering and consumer protection. The OCC’s decision to withdraw from joint statements on crypto risks with the Federal Reserve and FDIC raises questions about the consistency of regulatory oversight across agencies. Critics argue that a fragmented approach could undermine efforts to create a cohesive regulatory framework for digital assets.

Conclusion

The OCC’s reversal of its 2021 policy marks a significant milestone in the evolution of cryptocurrency regulation. By allowing banks to engage in crypto-related activities, the regulator is fostering innovation while emphasizing the importance of robust risk management. As the crypto industry continues to mature, the OCC’s decision could serve as a catalyst for greater collaboration between traditional financial institutions and the digital asset ecosystem. However, achieving a balance between innovation and regulation will remain a key challenge for policymakers in the years to come. For now, the message is clear: Cryptocurrencies are no longer on the fringes of finance — they are becoming an integral part of the banking system. Sources include: TheEpochTimes.com Reuters.com Occ.treas.gov DailyHodl.com