OCC approves banks' "risk-free" crypto transactions. What's next?

Source: Galaxy; Compiled by Jinse Finance

The Office of the Comptroller of the Currency (OCC) in the United States released a significant update last week regarding the cryptocurrency sector, confirming that U.S. banks can serve as “risk-free” primary intermediaries in cryptocurrency transactions.

In practice, banks can now purchase crypto assets from one client and sell them to another within the same trading day without recording these assets on their balance sheets.

In traditional markets, matching trades are routine for any brokerage firm on Tuesdays, but receiving explicit approval for digital asset brokerage services marks another important step forward in the OCC’s ongoing efforts to integrate digital assets with traditional markets.

Coupled with last month’s approval for banks to hold native tokens to pay gas fees and operate directly on public blockchains, the development trajectory is clear: regulators are building a coherent framework for banks to conduct on-chain business.

Galaxy’s Perspective:

The newly issued Interpretive Letter No. 1188 is almost as dull as most regulatory letters. The OCC essentially states that if banks are permitted to engage in risk-free securities proprietary trading, then, as long as they do not bear significant market risk exposure and properly manage settlement, operational, and compliance risks, they can apply the same model to cryptocurrencies. However, viewing cryptocurrencies as mundane infrastructure rather than magical internet money tends to relax regulations. It’s also evident that the OCC is employing its usual interpretation approach: technological neutrality.

Meanwhile, Interpretive Letter No. 1186 issued in November allows banks to hold small amounts of native tokens to pay gas fees and operate their own on-chain systems. Combining these two documents, we see a regulatory authorization for banks to interact directly with blockchain networks and conduct customer transactions on these networks.

It’s noteworthy that a U.S. regulatory agency is moving faster in cryptocurrency regulation than the global banking capital system. The Basel Committee’s updated banking crypto capital requirements in 2024 still classify most crypto assets as “radioactive hazardous materials”: high-risk exposures are subject to strict capital regulation, with limited hedging confirmation, and very conservative exposure caps. Even if banks attempt to go bankrupt by holding cryptocurrencies, success remains difficult. Tokens and stablecoins that meet looser regulatory conditions also face regulatory discretion and are subject to “infrastructure surcharges,” penalized simply because these assets are on-chain. This leads to a strange divergence: the OCC is expanding banks’ crypto usage, while the Basel Committee makes many of these activities economically unfeasible.

From a market structure perspective, last week’s guidance is undoubtedly encouraging. Banks (at least in the U.S.) finally have permission to handle cryptocurrency transactions like any other, without pretending that blockchain settlements require a PhD in cryptography or the embodiment of Satoshi Nakamoto. Allowing banks to execute crypto trades with risk-free principal enables clients to access regulated intermediaries rather than being forced to use unregulated venues.

If the OCC is doing anything, it’s subtly telling banks: “Listen, if you want to continue serving crypto clients in 2026, you need wallet infrastructure, node infrastructure, on-chain settlement control, and actual operational capabilities.”

Accepting gas fee payments is the first step; matching client crypto trades is the second; the third is “stop outsourcing all business to fintechs and operate some infrastructure yourself.”

The bigger question now is whether Basel will soften its stance. The last update to crypto regulation by Basel was in 2024, and since then, large Global Systemically Important Banks (GSIBs) have widely adopted crypto tracks for settlement, liquidity management, and tokenized collateral. Equity has been fully tokenized on-chain, with investors enjoying the same ownership protections they are entitled to. If banks can demonstrate they can safely run on-chain operations, Basel’s regulatory approach might revert to 2017 standards: imposing a set of capital rules designed for an industry in its growth pains on a sector that has made huge strides in maturity and institutional adoption.

Basel is revising its 2024 guidance, hoping to recognize that certain crypto assets are no longer just speculative tokens but are more like payment or settlement infrastructure. Regardless, the world is moving onto the chain; the true suspense lies in which decentralized finance (DeFi) technologies banks will adopt, transform, and package as natural evolutions of banking.