An unnamed nationwide financial institution has requested the Workplace of the Comptroller of the Forex for permission to carry crypto by itself steadiness sheet to assist blockchain-based providers. On Nov. 18, the OCC lastly answered.
In Interpretive Letter 1186, the company confirmed that nationwide banks could maintain the native property wanted to pay blockchain “community charges,” clearing the way in which for regulated establishments to run on-chain operations with out exterior workarounds.
The letter says a nationwide financial institution could pay blockchain “community charges,” generally referred to as fuel, as an exercise “incidental to the enterprise of banking.” It might maintain, as principal, the crypto property wanted to cowl these charges the place it has a “fairly foreseeable” operational want.
That one-sentence clarification simply eliminated the most important operational hurdle going through banks that need to custody tokens or transfer stablecoins on public chains: you’ll be able to’t settle transactions on Ethereum in case you’re not allowed to carry ETH.
The ruling sits between plumbing and precedent. Community charges on public chains are paid within the native asset of the chain. Therefore, any financial institution that wishes to custody tokens, transfer buyer stablecoins, or run tokenized deposits on Ethereum or comparable networks wants some quantity of ETH or an equal in hand.
Till now, many banks both stayed away from on-chain exercise completely or leaned on third-party suppliers to entrance fuel and wrap it right into a fiat charge.
The OCC is now saying banks can maintain these native tokens themselves as principal in the event that they’re solely wanted to run the pipes.
For giant custodians, tokenization desks, and stablecoin issuers working beneath the GENIUS Act framework, that shift means they will lastly be full-stack on particular networks with out outsourcing the final lacking piece.
How this connects to GENIUS and the March pivot
The OCC explicitly hyperlinks the letter to actions already allowed beneath the GENIUS Act stablecoin framework.
The company stated these actions would require banks to pay community charges “as agent for the client or as a part of its custody operations.”
The letter additionally builds on the broader March-Could 2025 pivot, when the OCC rolled again previous “you should get prior approval for any crypto exercise” steering and reaffirmed that banks can have interaction in crypto custody, some stablecoin exercise, and participation in distributed-ledger networks with out pre-clearance, topic to straightforward danger administration.
Letter 1186 zooms in on a selected operational snag inside that new framework: you’ll be able to’t do on-chain custody or tokenized deposits in case you’re not allowed to carry the fuel token.
American Banker quotes the letter’s logic instantly. If serving as a node is permissible, then “accepting the crypto asset community charge” and holding it for some interval should even be acceptable.
In any other case, a financial institution could possibly be “virtually barred” from a lawful exercise. That reasoning provides massive custodians a cleaner path to keep up a small fuel steadiness in-house fairly than farming that perform to fintech intermediaries or staying off-chain altogether.
The identical letter confirms that banks also can maintain restricted quantities of crypto as principal to check in any other case permissible crypto-asset platforms, whether or not constructed in-house or purchased from a 3rd occasion.
In different phrases, the OCC is blessing small, working inventories of native tokens so banks can really transfer transactions on the rails they’re allowed to make use of, and safely take a look at these rails earlier than committing buyer funds or balance-sheet capital to manufacturing deployments.
What modifications for custody and funds
For funds and settlement, that is about plumbing, not proprietary buying and selling. The change issues most for banks operating stablecoin operations or tokenized deposit applications that decide on public chains.
These establishments now have specific authority to carry the fuel wanted to course of buyer transactions with out structuring workarounds or counting on exterior liquidity suppliers.
The steering additionally covers conditions the place the financial institution pays charges on behalf of shoppers in its function as custodian or agent, particularly for GENIUS-compliant stablecoins.
A number of summaries stress that holdings are restricted to “operational wants,” together with charge buffers for settlement and for testing custody platforms, not open-ended speculative positions.
That’s the excellence between charge custody and balance-sheet crypto publicity: banks can maintain sufficient ETH to cowl foreseeable transaction volumes and platform testing, however they will’t construct a speculative e-book or deal with native tokens as an funding asset.
The OCC’s framing makes clear that is operational stock, not a brand new asset class for financial institution treasuries.
For custody desks, the ruling removes a layer of counterparty danger and operational complexity.
Banks that beforehand relied on third events to supply fuel now have the choice to internalize that perform, which shortens execution timelines and eliminates intermediaries which may themselves face liquidity constraints throughout community congestion or market volatility.
It additionally positions nationwide banks to compete extra instantly with crypto-native custodians which have all the time held native tokens as a part of their service stack.
The constraints banks nonetheless face
The OCC stresses that each one of this have to be finished in a “secure and sound” method and in compliance with present regulation.
The company’s press launch and commentary from the American Bankers Affiliation spotlight that banks should slim the scale of those holdings, tie them to particular permissible actions, and run the same old market, liquidity, operational, cyber, and BSA/AML danger frameworks round them.
The OCC solely oversees nationwide banks, whereas the Federal Reserve has, in a separate coverage assertion, continued to explain holding crypto as principal as “unsafe and unsound” for state member banks, creating cross-regulator friction even after the OCC loosened its stance earlier this yr.
That divergence means OCC-chartered banks have the inexperienced gentle to make use of operational fuel balances. Nonetheless, the broader US financial institution universe nonetheless faces combined indicators, relying on constitution kind and first regulator.
Banks can even have to navigate value volatility. Native tokens like ETH fluctuate, which implies the greenback worth of a financial institution’s fuel stock can swing everyday even when the token amount stays mounted.
The OCC’s “fairly foreseeable operational want” normal implies banks ought to measurement buffers conservatively and keep away from holding extra tokens that might expose them to speculative danger.
That creates a balancing act: maintain too little and banks danger operating out of fuel throughout high-congestion intervals. Then again, holding an excessive amount of implies carrying unstable property on the steadiness sheet with no clear operational justification.
What’s at stake for the trade
The broader query Letter 1186 solutions is whether or not US banks can take part in on-chain finance with out regulatory workarounds or structural disadvantages relative to crypto-native rivals.
For years, the implicit reply was no: banks might provide crypto providers solely by staying off-chain, partnering with third events, or searching for case-by-case approval for actions that concerned direct token dealing with.
The March pivot opened the door to custody and stablecoin exercise. This letter removes the final operational blocker by permitting banks to carry the fuel wanted to really settle transactions.
If the stance holds, count on nationwide banks with present tokenization or stablecoin applications to convey fuel administration in-house over the subsequent yr.
That shift received’t change the elemental economics of on-chain funds. Nonetheless, it should consolidate extra of the service stack inside regulated establishments and cut back reliance on fintech intermediaries for primary settlement features.
It additionally units a precedent for a way regulators would possibly strategy different operational requirements that require holding native tokens, from staking for proof-of-stake networks to liquidity provisioning for decentralized-finance protocols that banks would possibly finally contact.
The chance is that this stays an OCC-only place. If the Fed doesn’t observe go well with with comparable steering for state member banks, the result’s a two-tier system wherein constitution alternative determines whether or not a financial institution can maintain fuel tokens in any respect.
That will push extra establishments towards nationwide charters for crypto-related companies, concentrating exercise beneath a single regulator and leaving state-chartered banks at a aggressive drawback for on-chain providers.
For now, Letter 1186 is permission, not coverage convergence, and the space between these two will outline how far US banks can really go.
