**OCC Confirms Banks Can Facilitate Crypto Transactions as Intermediaries**
The Office of the Comptroller of the Currency (OCC) has issued a significant clarification regarding the role of national banks in cryptocurrency transactions. In its recent Interpretive Letter 1188, the OCC confirmed that banks are permitted to engage in “riskless principal” transactions involving crypto-assets. This means that banks can act as intermediaries, purchasing cryptocurrency from one customer and selling it to another without holding the assets in inventory, effectively functioning as brokers on behalf of their clients.
This guidance aligns with a broader regulatory movement aimed at reducing restrictions on cryptocurrency activities within the traditional banking sector. Earlier this year, the OCC lifted previous requirements that mandated banks to seek prior approval before participating in certain crypto operations, indicating a growing acceptance of digital assets in mainstream finance.
As a result of this new guidance, U.S. banks can now offer cryptocurrency services akin to traditional brokerage activities. Recently, Bank of America announced that it would allow its wealth management clients to allocate between 1% and 4% of their portfolios to digital assets. This initiative applies across various divisions, including Merrill and Bank of America Private Bank, enabling over 15,000 advisers to proactively recommend cryptocurrency investments.
In a notable development, PNC Bank has become the first major U.S. bank to provide eligible Private Bank clients with direct access to bitcoin trading through its own platform, utilizing Coinbase’s infrastructure. This service allows qualified clients to buy, hold, and sell bitcoin without the need for an external exchange, following a strategic partnership with Coinbase established in July.
The OCC’s letter elaborates on the concept of “riskless principal transactions,” which occur when a bank buys an asset from one party with an immediate agreement to sell it to another, without holding the asset in inventory except in rare circumstances, such as settlement failures. In this capacity, the bank operates similarly to a broker, assuming limited risks related to settlement, market fluctuations, and credit.
The OCC also differentiates between crypto-assets classified as securities and those that are not. Transactions involving crypto-assets deemed securities are already permissible under existing regulations, as banks act without recourse, meaning they do not take on customer risk. The OCC extends this rationale to non-securities, framing these activities as part of the broader “business of banking.” U.S. law does not narrowly define banking, allowing banks to explore new activities that logically extend their traditional functions.
In summary, the OCC’s recent guidance marks a pivotal moment for the integration of cryptocurrency within the banking sector, paving the way for banks to expand their services and embrace digital assets.
**FAQ**
**Can banks act as intermediaries in cryptocurrency transactions?**
Yes, the OCC has confirmed that national banks can engage in “riskless principal” transactions involving crypto-assets, allowing them to act as intermediaries between buyers and sellers without holding the assets in inventory.