The Federal Reserve, FDIC, and OCC have released guidance that allows banks to hold cryptocurrencies for their customers. This guidance explains how banks can safely manage crypto assets while following strict rules. It highlights the need for strong risk management to address issues like cybersecurity, market ups and downs, and compliance with regulations.
Banks’ Crypto Custody Rules Clarified
The guidance details how banks can manage crypto assets for clients. Banks can take on either fiduciary or non-fiduciary roles, but they must follow existing legal and risk management standards. Key risks include cybersecurity threats, control of cryptographic keys, and unpredictable crypto markets.
Banks must comply with anti-money laundering laws, counter-terrorism financing rules, and OFAC regulations. If banks hold private keys, they take full responsibility, which means they control the assets entirely, even to the point of limiting customer access.
Banks can use third-party custody vendors, but they are still fully responsible for these vendors’ actions and must carefully check them out. This approach is in line with global trends, as banks in Europe and Asia are also permitted to offer crypto services with strict oversight.
More Banks Embrace Crypto Service
Regulatory frameworks, such as the EU’s MiCA licensing, enable banks to manage crypto assets under similar liability rules. Vendors must meet high standards to reduce risks such as cybersecurity attacks or poor management. This guidance helps U.S. banks compete internationally while keeping strong accountability.
This joint guidance represents a careful but important step toward including digital assets in traditional banking. It shows a rising acceptance of crypto, with regulators making sure banks manage risks effectively. As regulators globally simplify frameworks and lower the hurdles, more and more financial institutions are flocking to offer crypto services.
For example, the Federal Reserve Board (Fed) announced in April that it had withdrawn restrictive guidance for banks related to their crypto-asset and dollar token activities, marking a significant shift in the regulatory landscape. This means that U.S. banks can now treat crypto like other banking services, with oversight through regular supervision.
Crypto companies are now increasingly focusing on the U.S. banking sector to blend into the traditional financial system. This support from regulators, including Trump’s backing of blockchain innovations, is encouraging this trend.
However, the focus on exclusive key control highlights the high responsibility banks have. As more people adopt crypto, this guidance lays a foundation for safe and regulated banking in the digital age.
