U.S. Banks Authorized for Riskless Principal Crypto Trading by OCC in 2025

The Office of the Comptroller of the Currency (OCC) has released Interpretive Letter 1188, confirming that U.S. banks can engage in riskless principal crypto trades. This decision is part of a broader effort in 2025 to ease various regulatory restrictions imposed by the Federal Reserve, FDIC, and OCC on custody and tokenized financial systems.

Key Takeaways

The OCC's Interpretive Letter 1188 permits U.S. banks to conduct riskless principal crypto trades, facilitating smoother entry into the digital asset market.
Banks can now serve as intermediaries in crypto transactions, buying from one customer and selling to another without holding inventory.
Compliance with existing regulations, such as the Bank Secrecy Act, is still essential.
The regulatory environment has evolved significantly in 2025, with several key regulatory bodies removing restrictions on banks engaging with cryptocurrency and stablecoins.
U.S. banks can now provide cryptocurrency services without introducing financial exposure into their balance sheets, integrating these operations with traditional banking services efficiently.

OCC Letter 1188 lets U.S. banks run riskless crypto trades

OCC and FDIC Simplifying Regulations for Stablecoins

The latest guidance allows banks to act as intermediaries in crypto transactions by purchasing digital assets from one customer and simultaneously selling them to another without needing to hold any cryptocurrencies in inventory. This move is part of a series of regulatory changes in 2025, aimed at enhancing bank participation in digital asset markets.

Interpretive Letter 1188 specifies that national banks can participate as principal traders in crypto transactions while executing offsetting deals with other customers. This structure allows banks to operate as intermediaries without needing to store coins, similar to brokers acting on behalf of clients.

However, banks must still comply with existing laws, including Bank Secrecy Act and anti-money laundering regulations. They remain responsible for managing third-party risks and adhering to trading regulations while conducting these transactions, as outlined by the OCC.

This new authorization opens up regulated pathways for banks to engage in crypto market activities without facing the risks tied to price fluctuations. As intermediaries, banks can facilitate crypto transactions for their customers, potentially influencing trading spreads and settlement systems for wealth management, corporate banking, and private banking clients.

The Interpretive Letter released in December marks a significant step in a wider regulatory transformation in 2025, which has worked to eliminate barriers for banks entering the cryptocurrency ecosystem. Prior to this, the OCC had indicated in November that banks could hold small quantities of native tokens on their balance sheets for covering network fees and experimenting with compliant platforms, thus easing restrictions on custody, tokenized settlements, and blockchain operations within banking.

In May, the OCC provided further clarification that banks are allowed to offer crypto custody and execution services. They can outsource these operations to qualified third parties, including sub-custodians, under established risk management practices, thereby cementing practices already in place in the market.

Earlier in March, the OCC released Interpretive Letter 1183, which overhauled the regulatory landscape by clarifying the legality of crypto custody, stablecoin activities, and engagement with distributed-ledger technologies. The OCC positioned these activities as integral to banking rather than as new business ventures needing exception statuses.

The Federal Deposit Insurance Corporation (FDIC) dismantled its 2022 pre-approval process in March, informing banks under its supervision that they could participate in lawful crypto activities without prior consent, as long as risks are managed via standard examination protocols. This shift transitioned from requiring regulatory pre-approval to normal oversight.

In April, the Federal Reserve rescinded its 2022 and 2023 supervisory letters concerning crypto and dollar-token operations, along with several risk statements. These adjustments were positioned as a means to support innovation while ensuring banks remain under regular supervision, thereby removing specific barriers for state member banks interested in stablecoin and tokenized deposit frameworks.

In July, the Fed, OCC, and FDIC jointly reaffirmed that banks could provide crypto-asset safekeeping services as long as they follow existing regulations. This recognition contributes to the growing acceptance of crypto activities in the financial ecosystem without imposing additional regulatory requirements.

The cumulative impact of these regulatory shifts throughout the year has clarified the authority of banks to engage in custody, execution, and intermediary operations within crypto markets, including managing fees associated with network activity. Eliminating prior approval protocols at both the FDIC and the Fed has also significantly reduced legal ambiguities and operational hurdles for banks looking to integrate with crypto payment and settlement systems.

With the authorization for riskless principal trading, banks are poised to participate in the cryptocurrency market as matched-principal routers for spot transactions while avoiding price risk exposure. Immediate risk offsetting remains a crucial requirement to ensure these transactions retain their riskless nature, fitting smoothly within current risk management frameworks.

Regulatory clarity now positions U.S. banks to provide customer services for crypto trading while operating seamlessly within existing wealth management and corporate banking frameworks. This means that they can offer these services without needing separate exchange accounts or exposing their balance sheets to cryptocurrency risk, presenting an attractive opportunity for market participants.