OCC letter finds cryptocurrency custody services within realm of permitted bank activities

Providing cryptocurrency custody services, including holding unique cryptographic keys associated with cryptocurrency, is a modern form of traditional bank activities related to custody services and is permitted for federally chartered banks and savings associations, the Office of the Comptroller of the Currency said in an interpretive letter issued Wednesday.

The agency also said that crypto custody services may extend beyond passively holding “keys.”

According to the letter, national banks “may provide permissible banking services to any lawful business they choose, including cryptocurrency businesses, so long as they effectively manage the risks and comply with applicable law.”

In releasing the letter, the OCC said that national and state banks and thrifts have long provided safekeeping and custody services, including both physical objects and electronic assets. It added that the OCC has specifically recognized the importance of digital assets and the authority for banks to provide safekeeping for such assets since 1998.

The OCC’s interpretive letter (#1170), for example, states that with regard to electronic safekeeping activities, the agency has previously issued interpretive rulings concluding that banks may escrow encryption keys used in connection with digital certificates, “finding that the key escrow service is a functional equivalent to physical safekeeping, except it uses electronic technology suitable to the digital nature of the item to be kept safe.” It noted that holding the cryptographic access key to a unit of cryptocurrency “is an electronic corollary of these traditional safekeeping activities.”

Providing custody services for cryptocurrency is permissible “in both fiduciary and non-fiduciary capacities,” the letter states.

The OCC letter states that its findings apply equally to federal savings associations.

Federally Chartered Banks and Thrifts May Provide Custody Services For Crypto Assets

OCC Interpretive Letter #1170