A Landmark Shift in US Banking Regulation for Crypto Assets
Since 2025, the US banking industry has experienced a significant transformation in its regulatory framework for digital assets, opening the door for traditional financial institutions to participate in cryptocurrency activities. Major banking regulators, including the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC), have rescinded previous guidance that was cautious or restrictive regarding banks' involvement in cryptocurrency activities, adopting a more supportive stance. This marks a critical turning point for the integration of digital assets into the traditional banking system.
Key Regulatory Policies and Timeline
- Legalization of Crypto Asset Custody Services: As early as July 2020, the OCC confirmed through Interpretive Letter #1170 that national banks could provide cryptocurrency custody services to customers. In July 2025, the OCC, the Federal Reserve, and the FDIC issued a joint statement further clarifying that national banks can offer crypto asset custody services, provided they establish robust risk management and compliance frameworks.
- Rescission of Restrictive Guidance and Streamlined Approvals: In March 2025, the OCC issued Interpretive Letter 1183, replacing previous restrictive guidance and allowing national banks and federal savings associations to engage in a wide range of digital asset activities without needing prior non-objection from regulators. Subsequently, the FDIC in March/April 2025 and the Federal Reserve in April 2025 also rescinded guidance requiring banks to provide advance notice or obtain approval before engaging in crypto-related activities. Banks' crypto asset activities will be monitored through "normal supervisory processes."
- Permission for Limited Holding of Crypto Assets: In November 2025, the OCC issued Interpretive Letter No. 1186, confirming that national banks can hold limited amounts of crypto assets on their balance sheets for the purpose of paying blockchain network fees and testing crypto asset platforms.
- "Riskless Principal" Trading Approved: In December 2025, the OCC issued guidance allowing national banks to engage in "riskless principal" crypto asset transactions, which involve matching customer buy and sell orders without holding inventory.
- SEC Rescinds SAB 121: The US Securities and Exchange Commission (SEC) rescinded Staff Accounting Bulletin 121 (SAB 121) in January 2025. This rule previously required companies holding customer crypto assets to record a corresponding liability on their own balance sheets, making it economically unfeasible for banks to offer crypto custody services. The rescission of SAB 121 removed a major accounting obstacle for banks entering this space.
Proactive Layout by Traditional Banks
With regulatory barriers removed, several major US banks have actively moved in 2026 to integrate crypto asset services into their existing financial infrastructure:
- BNY Mellon: As one of the world's largest custodians, BNY Mellon expanded Bitcoin and Ethereum custody services to Abu Dhabi in May 2026 and provides custody for crypto assets for ETF issuers.
- Citigroup: On August 18, 2026, Citigroup announced the launch of its Custody+ platform, planning to integrate Bitcoin into its system managing $34.5 trillion in traditional assets by the end of 2026.
- Other Major Banks: State Street, U.S. Bank, and others have also launched or committed to launching direct cryptocurrency custody services. JPMorgan, Bank of America, Goldman Sachs, Morgan Stanley, and Wells Fargo are also actively involved in institutional crypto services, tokenization of deposits, or offering Bitcoin ETFs.
Market Impact and Outlook
The shift in regulatory attitude and the entry of traditional banks mark a critical moment for the integration of digital assets into the traditional financial ecosystem. This helps bring more crypto transactions into a regulated environment, enhancing market transparency and compliance.
Despite increasing competition from traditional banks, crypto-native custody institutions like Coinbase Custody still hold significant market share, for example, providing custody services for over 80% of US spot Bitcoin and Ethereum ETFs. Furthermore, the tokenization of real-world assets (RWA) market has grown by over 420% since early 2025, reaching $31.6 billion, demonstrating immense development potential.
However, banks engaging in crypto activities must still demonstrate robust governance, operational resilience, and compliance, and fully manage associated risks. It is important to note that Bitcoin in bank custody does not enjoy federal deposit insurance, and investors still need to fully understand the relevant risks.
