OCC approves banks' "risk-free" crypto transactions. What's next?

Source: Galaxy; Compiled by: Jinse Finance

The U.S. Office of the Comptroller of the Currency (OCC) released a significant update last week for the cryptocurrency sector, confirming that U.S. banks can now act as “risk-free” primary intermediaries in cryptocurrency transactions.

In effect, banks can now buy crypto assets from one client and sell them to another client on the same trading day without having to include the asset on their balance sheet.

In traditional markets, matching trades is a routine task for any brokerage firm on Tuesdays, but the explicit approval for banks to conduct digital asset brokerage business marks another important step forward for the OCC in its ongoing efforts to integrate digital assets with traditional markets.

Combined with the OCC's approval last month that banks can hold native tokens to pay gas fees and operate directly on public blockchains, the direction is clear: regulators are building a coherent framework for banks to conduct business on-chain.

Galaxy's View: The newly released Interpretation Letter 1188 is almost as dry and uninspiring as regulatory letters. The Office of the Comptroller of the Currency (OCC) is essentially stating that if banks are allowed to engage in risk-free proprietary trading of securities, they can apply the same model to cryptocurrencies, provided they do not assume significant market risk exposure and properly manage settlement, operational, and compliance risks. However, viewing cryptocurrencies as dry infrastructure rather than magical internet money has a deregulatory effect, and it's clear the OCC is employing its usual interpretative perspective: technological neutrality. Meanwhile, Interpretation Letter 1186, released in November, also allows banks to hold small amounts of native tokens to pay gas fees and operate their own on-chain systems. Combining these two documents, we can see that regulators are authorizing banks to interact directly with blockchain networks and allowing them to conduct customer transactions on these networks. It's noteworthy that a US regulator is moving faster than global bank capital regimes in cryptocurrency regulation. The Basel Committee's 2024 update to bank cryptocurrency capital requirements still treats most crypto assets as "radioactive hazards": high-risk exposures are subject to strict capital controls, limited hedging confirmations, and extremely conservative exposure caps, making it difficult for banks to succeed even if they attempt to go bankrupt by holding cryptocurrencies. Even tokenized assets and stablecoins, which meet less stringent regulatory conditions, face regulatory discretion and are subject to "infrastructure surcharges," being penalized simply because these assets are on-chain. Now, this strange divergence has emerged: the Office of the Comptroller of the Currency (OCC) is expanding banks' authority to use cryptocurrencies, while the Basel Committee is making many of these activities economically unfeasible. However, from a market structure perspective, last week's guidance is undoubtedly encouraging. Banks (at least in the US) are finally allowed to process cryptocurrency transactions like any other transaction, without having to pretend that blockchain settlement requires a cryptography PhD and being possessed by Satoshi Nakamoto. Allowing banks to execute cryptocurrency transactions with risk-free principal gives customers access to regulated intermediaries instead of being forced to use unregulated venues. If the Office of the Comptroller of the Currency (OCC) is doing anything, it's subtly telling banks: "Listen, if you want to continue serving cryptocurrency customers in 2026, you need wallets, node infrastructure, on-chain settlement control, and actual operational capabilities." Accepting gas fees is the first step; being able to match customers' cryptocurrency transactions is the second; the third is "stopping outsourcing all business to fintech companies and operating some of the infrastructure yourself." The bigger question now is whether the Basel Accords will soften its stance. The Basel Accords last updated their cryptocurrency regulations in 2024. Since then, large Global Systemically Important Institutions (GSIBs) have widely adopted cryptocurrency tracks for settlement, liquidity management, and tokenized collateral. Equity has been fully tokenized on-chain and enjoys the same ownership protection that investors are entitled to. If banks can demonstrate that they can securely operate on-chain businesses, then the Basel Accords' regulatory approach is akin to going back to 2017: imposing a set of capital rules designed for growing pains on an industry that has made significant leaps in maturity and institutional adoption. The Basel Accords are revising their 2024 guidance, hoping to acknowledge that some crypto assets no longer function as speculative chips but rather as payment or settlement infrastructure. Regardless, the world is moving on-chain; the real suspense lies in which decentralized finance (DeFi) technologies banks will adopt and adapt, packaging them as a natural evolution of the banking industry.