Regulating Bodies Detail Demands for Cryptocurrency Safekeeping Management
In a significant move for the cryptocurrency industry, U.S. regulators have provided clarity on the regulations governing the custody of digital assets by banks. Following the rescission of Staff Accounting Bulletin 121 (SAB 121), a rule that had previously limited financial institutions from holding crypto directly, the financial sector has seen a series of developments that have clarified the current regulations.
On July 14, 2025, the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board, and the Federal Deposit Insurance Corporation (FDIC) issued a joint statement on crypto-asset safekeeping by banking organizations. This statement emphasizes compliance with existing laws and regulations, highlighting risk management principles without introducing new supervisory expectations.
One of the key developments was the issuance of OCC Interpretive Letter 1184 on May 7, 2025. This letter reaffirms and expands the authority of national banks and federal savings associations to provide custody services for crypto assets. It allows banks to act in both fiduciary and non-fiduciary capacities and to outsource custody services to third parties, provided they maintain robust risk management and compliance frameworks.
The guidelines issued by the regulators emphasize the importance of risk management principles. Banks must conduct comprehensive risk assessments for custodial activities, managing financial exposure, asset complexity, control frameworks, staff expertise, and contingency planning. Cryptographic key management is another critical aspect, with banks needing to generate, store, and secure cryptographic keys effectively to mitigate liability for losses or compromises.
Banks must also adhere strictly to anti-money laundering (AML), Bank Secrecy Act (BSA), and other regulatory requirements. Clear customer agreements outlining responsibilities are essential, as is due diligence when engaging sub-custodians or vendors.
The regulatory clarity is expected to encourage more traditional financial institutions to enter the crypto custody space, provided they meet operational and regulatory demands. Banks may provide safekeeping services for crypto assets, whether in a fiduciary or non-fiduciary capacity. Institutions are encouraged to carefully assess operational, legal, and technological risks before launching crypto-related services.
The issue of crypto custody gained further prominence following the introduction of exchange-traded funds in early 2024. Overturning SAB 121 opens the door for more banks and other organizations to hold digital assets directly. The Senate voted in a bipartisan effort to overturn SAB 121 in the previous year, a move opposed by then-President Biden. However, SAB 121 was eventually rescinded four days after President Trump took office.
U.S. banks collectively held nearly $16 billion in digital assets by mid-2024, indicating a growing interest in and adoption of cryptocurrencies by traditional financial institutions. The regulators' recent statements aim to ensure that banks provide crypto asset custody services securely and in compliance with existing regulatory frameworks.
[1] Office of the Comptroller of the Currency. (2025). Crypto-asset safekeeping by banking organizations. Retrieved from https://www.occ.gov/news-issuances/bulletins/2025/bulletin-2025-45.html
[2] Office of the Comptroller of the Currency. (2025). Interpretive letter 1184. Retrieved from https://www.occ.gov/news-issuances/letters/2025/interp-1184.html
[3] Federal Reserve Board. (2025). Joint statement on crypto-asset safekeeping by banking organizations. Retrieved from https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250714a.htm
[4] Federal Deposit Insurance Corporation. (2025). Crypto-asset safekeeping by banking organizations. Retrieved from https://www.fdic.gov/news/news/financial/2025/fil25012.html
- Due to the recent regulatory clarity, traditional financial institutions are increasingly considering investing in cryptocurrencies by providing secure custody services for digital assets, following the guidelines laid out by organizations such as the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corporation.
- As technology continues to advance in the finance sector, businesses looking to get involved in investing in cryptocurrencies will need to focus on risk management principles, including comprehensive risk assessments, effective cryptographic key management, and adherence to anti-money laundering regulations, when providing custody services for digital assets.
