TL;DR:
- Banks can offer crypto custody—but only with strict risk management systems in place.
- Reputational risk is no longer a regulatory concern, easing crypto partnerships.
- Fed, FDIC, and OCC stress cybersecurity, key protection, and updated risk frameworks.
Federal Regulators Clarify How Banks Can Handle Crypto Custody
In a joint statement released Monday, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) outlined how banks can handle your crypto under existing rules. While no new policies were introduced, the agencies emphasized that banks must apply the same risk management standards to crypto as they do to traditional financial services.
Key areas of focus include:
- Secure handling of private keys
- Strong cybersecurity protocols
- Protection of customer data
The regulators stated that these safeguards must be in place before a bank begins offering crypto custody services.
Risk Frameworks Must Evolve With the Market
Regulators also advised that banks should adapt their internal risk frameworks to keep up with the rapidly changing crypto landscape. They noted:
“A banking organization that is contemplating providing safekeeping for crypto-assets should consider the evolving nature of the crypto-asset market.”
This includes implementing detailed risk controls, incident response plans, and continuous oversight, similar to the expectations for traditional assets.
End of “Reputational Risk” as a Barrier
In a significant move, the Federal Reserve eliminated reputational risk as a factor in supervisory decisions. This change could encourage more partnerships between banks and crypto businesses, removing a previous obstacle that discouraged involvement in the digital asset space.
Expanded Flexibility for Crypto Services
Recent developments show a shift in tone from all three agencies:
- The OCC (as of May) now allows banks to hold digital assets in their own portfolios.
- The FDIC said that banks no longer need to notify the agency before launching crypto services.
These changes open the door for banks to explore a broader range of crypto-related offerings, such as trading, custody, and settlement services.
New Leadership, More Crypto Experience
In another development, the Senate recently confirmed Jonathan Gould as the new head of the OCC. With previous experience at blockchain firm Bitfury and a long tenure at the OCC, Gould’s appointment could signal a more crypto-forward stance from the agency.
As demand for digital assets continues to rise, banks and regulators are expected to collaborate more closely—with clearer guidance on how banks can handle your crypto responsibly and securely.
