Chainalysis: US regulators are giving the green light for banks to engage in digital asset activities.

Written by: Chainalysis

Compiled by: Wuzhu, Jinse Finance

Abstract

U.S. banking regulators (Federal Deposit Insurance Corporation (FDIC), Federal Reserve, Office of the Comptroller of the Currency (OCC)) have rescinded their previous restrictive statements on crypto assets, granting banks more freedom to engage in the digital asset space without prior approval.

If banks can maintain appropriate risk management measures, they can more easily provide crypto services and offer banking services to crypto businesses.

Despite the easing of regulations in the United States and the more supportive stance taken by many regions, globally influential institutions must still comply with the standards set by the Basel Committee.

There are still questions about whether American banks can hold cryptocurrency assets on their balance sheets or engage in cryptocurrency lending activities, and further clarifications are expected in the future.

U.S. federal banking regulators have rescinded a previous joint statement on crypto assets, granting banks greater flexibility to engage in digital asset activities. These agencies emphasized their commitment to fostering innovation and keeping expectations aligned with market changes—they acknowledge the growing role of blockchain as a core financial infrastructure. This opens the door for traditional financial institutions (FI), allowing them to enter the digital asset space with fewer regulatory hurdles.

The Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve have officially removed barriers for banks to participate in cryptocurrency.

On April 24, 2024, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, and the Office of the Comptroller of the Currency (OCC) announced the withdrawal of previous statements regarding banks' participation in cryptocurrency assets and related activities.

Previously, regulatory authorities imposed strict regulatory requirements, especially regarding the volatility of cryptocurrency-related deposits, and established stringent liquidity management regulations. The regulatory statement issued in 2023, which has now been withdrawn, actually set warning barriers for banks considering participation in cryptocurrencies. Although these recommendations did not constitute a complete ban, they delivered a strong regulatory warning to banks:

Operate directly with cryptocurrency (issue/hold digital assets)

Provide banking services for cryptocurrency businesses

Holding stablecoin reserves

With the revocation of these statements, banks can now participate more flexibly in the cryptocurrency market, as long as they maintain good risk and compliance practices — this move acknowledges the growing legitimacy of cryptocurrencies and the increasing demand from customers for digital asset services.

Important updates on bank regulation: new opportunities arise

Regulatory agencies have made specific adjustments, eliminating previous obstacles for banks to participate in digital asset businesses:

The Office of the Comptroller of the Currency ( OCC ): has revoked Interpretive Letter No. 1179, no longer requiring national banks to obtain a formal "no objection" document before processing digital asset transactions. It has reinstated the prior permissions regarding cryptocurrency custody, stablecoins, and the use of blockchain as stated in Letters No. 1170, 1172, and 1174. Custodial services and activities utilizing distributed ledger technology are now considered permitted, provided that these activities are conducted safely and legally. Additionally, the Office of the Comptroller of the Currency issued Interpretive Letter No. 1184 on May 7, 2025, confirming that national banks and federal savings associations may:

Buy and sell custodial assets according to the client's wishes.

Outsource cryptocurrency asset activities (such as custody and execution services) to third parties, provided that the third parties follow appropriate risk management practices.

Federal Deposit Insurance Corporation ( FDIC ): Issued new guidelines confirming that institutions regulated by the FDIC can engage in permitted cryptocurrency-related activities without prior FDIC approval, as long as they properly manage risks and comply with regulations. Meanwhile, the FDIC has rescinded the prior notice requirement in FIL-16-2022.

Federal Reserve: It has rescinded four previous cryptocurrency directives, including the joint statement, SR 22-6, and SR 23-8, which required state member banks participating in cryptocurrency activities to provide advance notice, as well as notifications for dollar token activities and "no objection" statements. The Federal Reserve will now oversee banks' cryptocurrency activities through regular regulatory procedures.

What does this mean for American banks looking to enter the digital asset space?

This regulatory shift presents a significant opportunity for U.S. banks considering entering the digital asset space.

Simplified market access: By eliminating prior notification and approval requirements, regulators have reduced the resistance for banks to provide cryptocurrency services, thereby accelerating market access and enhancing competitiveness.

Expand the allowed scope of cryptocurrency business: Banks now have clearer autonomy to participate in a range of cryptocurrency businesses previously affected by regulatory uncertainty, including custody services, payments, and distributed ledger applications.

Expand services for crypto clients: Financial institutions can more confidently provide banking services to businesses in the crypto space (including exchanges and stablecoin issuers), thereby opening up new customer segments and revenue opportunities.

Despite clear regulations from the authorities, there are still some significant issues, and further guidance is expected to be issued:

Can banks hold cryptocurrency assets on their balance sheets?

Can banks participate in cryptocurrency lending activities, and if so, how?

Risk management remains important

Despite the easing of regulations, regulatory agencies still emphasize the importance of proper risk management. Banks must ensure:

All cryptocurrency activities comply with current laws and regulations (such as the Bank Secrecy Act, Anti-Money Laundering/Anti-Terrorist Financing laws).

Steady operations, safe operations.

Implement comprehensive risk management controls.

International background

While U.S. regulators have historically been clearly cautious about banks' cryptocurrency operations and the provision of custodian services, many international counterparts have taken a more neutral or even supportive stance in recent years. For instance, in 2023, the Hong Kong Monetary Authority (HKMA) issued guidelines to encourage banks to provide banking services to regulated virtual asset service providers. Similarly, the central banks of South Africa, Nigeria, and the UAE have issued guidance to guide banks in managing financial integrity risks when participating in the cryptocurrency ecosystem. Regulators in the UAE, Singapore and Hong Kong have expressed their willingness to allow banks to issue stablecoins, reflecting their broader openness to responsible innovation in the financial sector.

However, internationally influential banks may still face some restrictions from the upcoming global standards. The Basel Committee on Banking Supervision (BCBS) has expressed concerns about the increased risks associated with unlicensed blockchain. As part of this, the Basel guidelines on the prudent treatment of banks' crypto asset risk exposures—which members of the Basel Committee have agreed to implement by January 1, 2026—will impose strict capital requirements on internationally active banks holding unlicensed blockchain assets on their balance sheets.

Although these standards are primarily aimed at internationally influential banks, in practice, many jurisdictions have also expanded their scope to include large or systemically important domestic banks. It is also noteworthy that the Basel standards are not legally binding—they must be adopted through national regulation, a process that may involve delays, modifications, or partial implementation. Once fully implemented, these capital requirements could make the costs of banks engaging in certain cryptocurrency activities prohibitively high, such as lending against crypto collateral and holding stablecoins.

How banks can build a compliant digital asset strategy

Banks intending to develop digital asset services should fully leverage the new regulatory environment and formulate structured, scalable cryptocurrency application solutions. With the significant reduction in entry barriers, financial institutions have a clearer path for building and expanding digital asset products.

Success depends on meticulous execution, strong partnerships, and strict compliance:

In light of the reduced regulatory barriers, assess strategic opportunities in the cryptocurrency sector and explore services such as custody, payments, tokenization, and blockchain infrastructure.

Develop a comprehensive risk management and compliance framework based on the unique characteristics of digital assets, including trading monitoring, customer due diligence, and anti-money laundering compliance.

Consider collaborating with a trusted cryptocurrency service provider.

Closely monitor the upcoming institutional guidelines to address more complex issues, such as cryptocurrency lending and holding digital assets other than stablecoins on the balance sheet.

Consider adopting a phased strategy using our five-phase framework "Cryptocurrency Maturity Journey" to help banks enter and develop in the cryptocurrency space.

Looking forward to the future empowered by blockchain

This regulatory shift represents a transformative moment for the landscape of the American banking industry. After years of caution and restrictions, regulators are now granting banks more freedom to explore opportunities in cryptocurrency, with the expectation that they will engage in responsible innovation.

The door to digital assets is now wide open, and the regulatory barriers hindering innovation are becoming fewer.