Under the new presidential administration, this spring has brought about a number of significant regulatory changes for banks. One such sea change has been the federal bank regulators’ approach to banks engaging in crypto services and other digital asset activities.
Since 2021 the Federal Reserve Board of Governors (FRB), Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) have issued, individually and jointly, several pieces of guidance which have caused banks to be cautious or even unwilling to engage in crypto-related activities. Under the prior administration, each federal regulator issued guidance requiring banks to notify their federal regulator of any intent to engage in crypto activity, demonstrate that such activity would be conducted in a safe and sound manner, and finally, for the purposes of crypto-related activities for the OCC and FDIC and dollar token activities for the FRB, require banks to receive a letter of nonobjection from their regulator prior to engaging in such activity.
Thereafter, following the failures of several large crypto-asset companies in 2022, the FRB, OCC, and FDIC issued a Joint Statement on Crypto-Asset Risks to Banking Organizations dated January 3, 2023, outlining the key risks associated with crypto-related activities and crypto sector participants. This statement cautioned “that issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralized network, or similar system is highly likely to be inconsistent with safe and sound banking practices.” In February of 2023, the FRB, OCC, and FDIC issued an additional Joint Statement which highlighted certain liquidity risks associated with crypto-assets and crypto-asset participants. These Joint Statements, along with the earlier guidance provided by each federal regulator, served to deter many banks from engaging in crypto-related services and created heavy burdens for those who were still willing to do so.
The Trump Administration has taken a friendlier stance on the crypto industry. Reflecting the Trump Administration’s interest in fostering digital assets in the US, each federal regulator has taken recent action to rescind several crypto-related pieces of guidance issued during the Biden Administration. In March and April of 2025 the FRB, OCC, and FDIC withdrew from and rescinded both Joint Statements issued in 2023. In that same time frame, each regulator also took action to rescind their respective office’s guidance requiring banks notify their regulator prior to engaging in crypto-related activity, and their requirement that each bank receive a nonobjection letter prior to engaging in certain crypto or dollar token activities. Ultimately, each federal regulator’s actions have led to the conclusion that banks may engage in a wide array of crypto-related activities, so long as the activity is conducted in a safe and sound manner and consistent with all applicable laws and regulations.
The OCC and FDIC have recently issued similar guidance affirming that it is permissible for its regulated institutions to engage in crypto-related activities, including but not limited to acting as a crypto-asset custodian, participating in certain stablecoin activities, and participating in independent node verification networks such as distributed ledger.
Through its actions to rescind and withdraw several pieces of guidance, the FRB has also made it clear that banks can now engage in crypto-related and dollar token activities. While the FRB has yet to release any recent guidance regarding the specific crypto-related services and dollar token activities it deems permissible to engage in, its recently withdrawn guidance (SR 22-6) defined crypto-asset related activity to include crypto-asset safekeeping and traditional custody services, ancillary custody services, facilitation of customer purchases and sales of crypto-assets, loans collateralized by crypto-assets, and the issuance and distribution of stablecoins.
To conclude, the doors are opening and the hurdles are getting lower for banks seeking to get involved in crypto-related services.
If you are interested in learning more about the types of services Banks can now engage, please contact an attorney in the Davenport Evans Banking and Financial Institutions practice group at 605-336-2880 or [email protected].
Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the state’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit www.dehs.com.