OCC Approves Banks to Handle Crypto Assets: Key Takeaways and Market Impact

The United States Office of the Comptroller of the Currency (OCC) announced on Wednesday, May 7, that national banks and federal savings associations can participate in crypto asset custody and trading services. According to the published Interpretive Letter 1184, banks may buy and sell crypto assets held in custody at the customer’s direction.

Additionally, the OCC clarified that national banks and federal savings associations are permitted to outsource to third parties bank-permissible crypto-asset activities. 

“As with any activity, a bank must conduct crypto-asset custody activities, including via a sub-custodian, in a safe and sound manner and in compliance with applicable law,” the OCC noted. 

Key Takeaways from OCC Announcement and Crypto Market Impact

The approval by the OCC for banks to handle crypto assets is a clear indication of the rising demand for cryptocurrencies by institutional investors. The notable surge in real-world assets tokenization has attracted notable attention from lawmakers seeking to ensure crypto market clarity and investor protection.

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With Wall Street banks permitted to handle crypto assets by the OCC, the cash inflow to crypto investment products will experience a sharp uptick in the near term. Moreover, the U.S. banking industry has experienced significant headwinds, including high unrealized losses on their investment securities.

The adoption of blockchain technology by traditional finance was in retrospect inevitable as a means to ensure sustainable future growth prospects.