Treasury Dept. Says Banks Can Keep Crypto On Their Balance Sheets in Certain Cases

A key banking regulator within the Treasury Department has officially greenlit the ability for national banks to hold and spend cryptocurrency in certain cases. 

The Office of the Comptroller of the Currency (OCC) confirmed in an interpretive letter Tuesday that major banks are officially permitted to keep crypto on their balance sheets to pay network fees on blockchains for “otherwise permissible” banking activities. 

National banks are also allowed to hold and use digital assets for testing crypto-related platforms, the regulator said.

“Permitting the bank to engage in the proposed activities enables it merely to expand… pre-existing permissible activity without having to expend resources or expose itself to operational and counterparty risks associated with acquiring the necessary crypto-assets from a third party,” Adam Cohen, the OCC’s senior deputy comptroller chief counsel, said in a letter justifying the new policy. 

Under the Biden administration, the OCC took a much more cautious approach to cryptocurrency—one that required national banks to receive approval from the regulator prior to engaging in most crypto-related activities. 

At the time, other banking regulators, including the FDIC, discouraged federally chartered banks from engaging in some types of crypto activity it deemed too risky—including engagement with public, permissionless blockchain networks like Ethereum, on which activity can not be censored by human administrators.

The aggressively pro-crypto Trump administration has moved this year, however, to dismantle such policies. In March, the OCC rescinded the Biden-era policy requiring national banks to gain regulator approval before engaging in crypto activity. It also greenlit the ability for major banks to custody crypto assets for their customers, and to engage in certain stablecoin-related activities.

Today’s announcement appears to go a bit further, by giving national banks explicit permission to hold crypto on their balance sheets for multiple purposes. It therefore brings America’s largest banks one step closer to the ability to move traditional banking functions on-chain, and increase their direct involvement in the crypto sector.