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US Banking Regulators Launch Roadmap For Crypto-Associated Actions By Banks – Finance and Banking

  • US banking regulators issued a joint assertion that units forth
    a roadmap for the businesses to supply authorized readability on banking
    organizations’ authority to interact in 5 crypto-related
    providers and actions.

  • Concurrently, the OCC issued a brand new authorized interpretation that
    scales again a number of earlier authorized interpretations with respect to
    OCC-related establishments partaking in sure crypto-related
    actions and establishes new necessities for these

  • On this Authorized Replace, we briefly summarize these regulatory
    bulletins and supply some insights on steps banking
    organizations ought to take to adjust to the brand new necessities and
    to anticipate future actions by regulators.

On November 23, 2021, the Board of Governors of the Federal
Reserve System (“Federal Reserve”), the Workplace of the
Comptroller of the Foreign money (“OCC”) and the Federal
Deposit Insurance coverage Company (“FDIC,” collectively with
the Federal Reserve and the OCC, the “Federal Banking
Regulators”) launched a roadmap for a joint effort to make clear
the authorized authority for banking organizations to interact in
crypto-related actions (the “Roadmap”).1 The identical day, the OCC launched Interpretive
Letter 1179 (the “OCC Letter”), which clarifies and
narrows the scope of three OCC interpretative letters on the
permissible cryptocurrency actions by nationwide banks and federal
financial savings associations (collectively, “OCC-regulated
banks”) from 2020 and 2021 and reinterprets an OCC
interpretative letter on the company’s chartering authority with
respect to belief firms.2
Considerably, the OCC Letter specifies new necessities for
OCC-regulated banks to interact within the actions coated by the 2020
and 2021 interpretative letters, together with, going ahead,
acquiring a written discover of non-objection by the OCC, and
signifies that OCC-regulated banks already partaking in these
actions are topic to a retroactive requirement to supply
discover of such actions to the company.

The Roadmap units up a course of for the Federal Banking Regulators
to make clear the authorized parameters for banking organizations partaking
in, and the appliance of federal banking legal guidelines to, crypto-related
actions. Though the Roadmap supplies a possibility to resolve
a number of the authorized uncertainty at the moment surrounding crypto-related
actions, the content material and tone of the OCC Letter counsel that the
Federal Banking Regulators might take a really cautious strategy to
opening the gates for banking organizations to interact in
crypto-related actions.

On this Authorized Replace, we summarize the Roadmap and the OCC
Letter and supply ideas on the Federal Banking Regulators’
subsequent steps.


The Roadmap describes the actions the Federal Banking
Regulators have taken with respect to banking organizations
partaking in crypto-related actions. In distinction to earlier
initiatives that have been undertaken independently by the FDIC3 and the OCC,4 the Roadmap emphasizes that the
Federal Banking Regulators at the moment are looking for to intently coordinate
the event of a uniform coverage on the scope and prudential
necessities for banking organizations’ crypto-related

The Roadmap states that the Federal Banking Regulators have so
far centered on growing a lexicon for financial institution organizations’ use
of crypto-assets, understanding key dangers and analyzing the
software of the prevailing legislation governing banking
organizations’ participation in crypto-related actions.
Additional, the Federal Banking Regulators have decided that
banking organizations could also be concerned about partaking in a lot of
crypto-related actions, together with custody, buyer buying and selling,
collateral, funds and on-balance sheet exposures.

The Roadmap additionally states that the Federal Banking Regulators have
decided that there are a variety of points surrounding banking
organizations’ participation in crypto-related actions that
warrant additional supervisory steerage. Due to this fact, the Federal
Banking Regulators plan to launch regulatory supplies all through
2022 that may present (i) higher readability on whether or not sure
actions associated to crypto-assets carried out by banking
organizations are legally permissible and (ii) expectations for
security and soundness, client safety and compliance with
current legal guidelines. Particularly, this steerage will tackle:

  • Crypto-asset safekeeping and conventional custody providers

  • Ancillary custody providers

  • Facilitation of buyer purchases and gross sales of

  • Loans collateralized by crypto-assets

  • Issuance and distribution of stablecoins

  • Actions involving the holding of crypto-assets on stability

Additional, the Federal Banking Regulators plan to judge the
software of capital and liquidity requirements to crypto-assets for
actions involving US banking organizations and can proceed to
interact with the Basel Committee on Banking Supervision on its
consultative course of on this space.5

OCC Letter

In 2020 and early 2021, the OCC issued three interpretive
letters (Interpretative Letters 1170, 1172 and 1174) that
decided that the supply of custody providers, holding of
deposits that function reserves for sure stablecoins and
providing of sure fee facilitation providers have been permissible
actions for OCC-regulated banks.6
The OCC Letter is framed as a overview of those earlier
interpretative letters on crypto-related actions.

In its reassessment of the prior interpretative letters, the OCC
Letter pulled again its prior interpretations by stating that an
OCC-regulated financial institution might interact within the actions addressed within the
earlier letters provided that it “can reveal, to the
satisfaction of its supervisory workplace, that it has controls in
place to conduct the exercise in a secure and sound method.” The
OCC Letter goes on to instruct OCC-regulated banks to inform their
OCC supervisory workplace in writing previous to partaking in
crypto-related actions and obtain written non-objection from
the company. It additionally states that the OCC supervisory workplace will
count on the financial institution to reveal the adequacy of its danger measurement
and administration info programs and controls and fulfill any
different supervisory concerns related to the exercise. For
instance, the financial institution might want to reveal, in writing, an
understanding of any compliance obligations associated to the precise
actions the financial institution intends to conduct, together with any relevant
necessities beneath the federal securities legal guidelines, the Financial institution Secrecy
Act, anti-money laundering, the Commodity Trade Act and client
safety legal guidelines.

In its 2020 and 2021 interpretative letters, the OCC didn’t
require a written submission and non-objection previous to partaking in
an exercise nor specify regulatory necessities that OCC-regulated
banks should reveal to the company’s satisfaction.
However, the OCC Letter additionally states that the OCC has a
retroactive expectation in that such banks already engaged in
crypto-related actions ought to have offered discover to the
company, although they don’t have to acquire company non-objection to
proceed partaking in these actions.7

Moreover, the OCC Letter addresses one other piece of steerage
that the OCC issued in January 2021, OCC Interpretive Letter 1176,
which pertains to the company’s authority to constitution nationwide
belief banks that interact in belief actions permissible beneath state
legislation however that aren’t thought-about fiduciary in nature beneath federal
legislation (e.g., sure custody providers).8 Particularly, Interpretive Letter
1176 states that the OCC will look to state legislation to find out
whether or not a state-chartered entity looking for an OCC constitution is engaged
in a fiduciary exercise if state-authorized actions should not
explicitly thought-about fiduciary in nature beneath relevant federal
legislation. OCC Interpretative Letter 1176 is critical for
crypto-related companies as a result of Anchorage Digital Financial institution, which
supplies custody providers for cryptocurrency and different digital
belongings, acquired its OCC constitution in reliance on Interpretative
Letter 1176.

Within the OCC Letter, the OCC explains that Interpretative Letter
1176 merely addressed the authority to constitution a nationwide financial institution and
doesn’t change the obligations of current OCC-regulated banks
that train fiduciary powers beneath the OCC’s guidelines.9 As well as, it states that the
company retains its discretion to find out if a state-charted
entity’s actions which can be thought-about belief or fiduciary
actions beneath state legislation are thought-about belief or fiduciary
actions for functions of relevant federal legislation. These statements
point out that the OCC will take a extra skeptical strategy to
approving conversions of state-chartered entities engaged in
crypto-related actions beneath state legislation to nationwide banks and
won’t solely look to state legislation.


The Roadmap definitely supplies a possibility for the Federal
Banking Regulators to formally delineate the authority of banking
organizations to interact in crypto-related actions and thereby
tackle the uncertainty that at the moment exists surrounding if and
how banking organizations can interact in crypto-related actions.
It additionally supplies a possibility for market individuals to elucidate
to the Federal Banking Regulators why specific actions ought to
be approved. Nonetheless, though it is extremely seemingly that the Roadmap
will outcome within the Federal Banking Regulators authorizing banking
organizations to interact in no less than some crypto-related actions,
the OCC Letter and different current statements and coverage paperwork by
the Federal Banking Regulators point out that any such authorization
will seemingly be slender in scope and/or topic to vital
prudential regulatory circumstances, similar to probably prior approval
from the suitable Federal Banking Regulator.10

Till the Roadmap yields additional regulatory steerage, banking
organizations ought to look to the OCC Letter to make sure that they
have the mandatory regulatory approvals for his or her crypto-related
actions. Accordingly, OCC-regulated banks that already are
engaged in crypto-related actions ought to promptly verify that
there’s a written file demonstrating prior discover to the OCC. In
some circumstances, this will likely contain submitting retroactive notices. In
accordance with the OCC Letter, OCC examiners at the moment are prone to ask
to overview copies of those notices and proof of applicable danger
administration practices. OCC-regulated banks which can be contemplating
crypto-related actions sooner or later ought to put together a danger
administration plan that demonstrates their capability to behave in a secure
and sound method and notify any nonbank companions of the prolonged
timeframe that could be required to acquire the mandatory

Lastly, banks that aren’t regulated by the OCC must also
think about studying the OCC Letter as if it have been issued by the Federal
Reserve or the FDIC. State banks typically might interact solely in
actions which can be permissible for a nationwide financial institution,11 and financial institution participation in
crypto-related actions isn’t any completely different on this regard.
Accordingly, state banks might need to focus on with their Federal
Banking Regulator the applicability of the OCC Letter earlier than
partaking in any crypto-related actions.


1 Press Launch, Companies problem joint assertion
on crypto-asset coverage initiative and subsequent steps
(Nov. 23,

2 OCC, Bull. 2021-57 (Nov. 23,

3 Press Launch, FDIC Points Request for
Data on Digital Property
(Might 17, 2021).

4 OCC, Bull. 2020-59 (June 4, 2020).

5 Please see our Authorized Replace on the consultative
course of:

6 OCC, Interp. Ltr. 1170 (July 22, 2020); OCC, Interp. Ltr. 1172 (Sept. 21, 2020); OCC, Interp. Ltr. 1174 (Jan. 4,

7 OCC Letter, p. 2, n. 3.

8 OCC, Interp. Ltr. 1176 (Jan. 11,

9 Additional, Interpretive Letter 1176 implied that an
exercise that’s thought-about a belief or fiduciary exercise beneath
state legislation can be topic to the OCC’s Half 9 regulation
no matter whether or not it was traditionally thought-about a fiduciary
exercise for functions of federal legislation. The OCC Letter clarifies that
for current nationwide banks, the division of actions between the
fiduciary and non-fiduciary capacities beneath federal legislation and the
software of Half 9 to solely fiduciary actions will not be affected
by Interpretive Letter 1176.

10 E.g., OCC, Appearing Comptroller Discusses Regulatory
Perimeter (Nov. 3, 2021),
Press Launch, President’s Working Group on
Monetary Markets Releases Report and Suggestions on
Stablecoins (Nov. 1, 2021)

11 State “wildcard” authority might permit state
banks to interact in actions which can be explicitly permitted solely
beneath federal legislation. Nonetheless, state legislation can’t authorize insured
state banks to interact in actions which can be prohibited by federal

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