Treasury Dept. Says Banks Can Maintain Crypto On Their Stability Sheets in Sure Circumstances – Decrypt

A key banking regulator inside the Treasury Division has formally greenlit the power for nationwide banks to carry and spend cryptocurrency in sure circumstances. 

The Workplace of the Comptroller of the Foreign money (OCC) confirmed in an interpretive letter Tuesday that main banks are formally permitted to maintain crypto on their stability sheets to pay community charges on blockchains for “in any other case permissible” banking actions. 

Nationwide banks are additionally allowed to carry and use digital belongings for testing crypto-related platforms, the regulator stated.

“Allowing the financial institution to have interaction within the proposed actions allows it merely to develop… pre-existing permissible exercise with out having to expend assets or expose itself to operational and counterparty dangers related to buying the mandatory crypto-assets from a 3rd get together,” Adam Cohen, the OCC’s senior deputy comptroller chief counsel, stated in a letter justifying the brand new coverage. 

Below the Biden administration, the OCC took a way more cautious strategy to cryptocurrency—one which required nationwide banks to obtain approval from the regulator previous to partaking in most crypto-related actions. 

On the time, different banking regulators, together with the FDIC, discouraged federally chartered banks from partaking in some forms of crypto exercise it deemed too dangerous—together with engagement with public, permissionless blockchain networks like Ethereum, on which exercise cannot be censored by human directors.

The aggressively pro-crypto Trump administration has moved this 12 months, nonetheless, to dismantle such insurance policies. In March, the OCC rescinded the Biden-era coverage requiring nationwide banks to achieve regulator approval earlier than partaking in crypto exercise. It additionally greenlit the power for main banks to custody crypto belongings for his or her clients, and to have interaction in sure stablecoin-related actions.

Right now’s announcement seems to go a bit additional, by giving nationwide banks specific permission to carry crypto on their stability sheets for a number of functions. It due to this fact brings America’s largest banks one step nearer to the power to maneuver conventional banking capabilities on-chain, and improve their direct involvement within the crypto sector.