- Banks can now handle stablecoins, crypto custody, and distributed ledgers
- Market watchers believe this is a massive and long tailwind update for the sector
U.S. banks are now free to engage in certain crypto activities, including custody of digital assets for customers, stablecoin payments, or running blockchain nodes.
The clarification came from the OCC (Office of the Comptroller of Currency), an agency mandated to oversee sound and safe operations of banks and savings associations.
Rodney E. Wood, an exec at OCC, stated,
“Today’s action will reduce the burden on banks to engage in crypto-related activities and ensure that these bank activities are treated consistently by the OCC, regardless of the underlying technology.”
The agency also rescinded prior guidelines that singled crypto as a liquidity risk for the banking system.
Market reactions
Reacting to the update, Jeremy Allaire, Founder of Circle (USDC), said,
“Banks using USDC. Coming soon to a blockchain near you. We are excited about wiring up the existing financial system to the new internet financial system.”
The previously coordinated banking restriction, known as ‘Operation ChokePoint 2.0,’ drove crypto de-banking and blocked banks from participating in the sector. Interestingly, the update is consistent with the pro-crypto shift under the new Trump administration.
Apart from the OCC, a similar pro-crypto position has been seen at the SEC and the FDIC (Federal Deposit and Insurance Corporation) lately. In fact, Alexander Grieve, Head of Government Affairs at Paradigm, echoed the same sentiment. He stated,
“OCC rescinds previous guidance that prevented banks from engaging in any crypto activity. Goodbye, Operation Chokepoint 2.0.”
For his part, market watcher Marty Party noted that the guidance would allow top chains to move trillions of dollars (stablecoins) for banks. He claimed this could dent Ripple’s control on banking ledger rails.
“This also dents Ripple’s $XRP effort to monopolize the banking ledger rails. Win-win. Huge news.”
That said, the move reinforces the increasing adoption of blockchain and stablecoins in traditional financial systems. Some top banks like JPMorgan, Goldman Sachs, and BNY Mellon are eyeing crypto offerings, including custody for U.S spot Bitcoin [BTC] ETFs – A direct competition to Coinbase.
