New OCC Guidance: Banks May Legally Act as Crypto Transaction Intermediaries
The Office of the Comptroller of the Currency (OCC) has released Interpretive Letter 1188, clarifying that national banks may engage in 'riskless principal' transactions involving crypto-assets. In such transactions, a bank buys a crypto-asset from one customer while simultaneously selling it to another, without holding the asset in inventory except in rare settlement failures. This effectively positions the bank as a broker, assuming limited settlement, market, and credit risk.
This guidance marks a further relaxation of regulatory barriers for crypto activities within traditional banking. In March, the OCC removed the requirement for banks to seek prior approval before engaging in certain crypto operations. Now, U.S. banks can offer crypto services in a manner similar to traditional brokerage activities without additional licensing.
The letter distinguishes between crypto-assets that are classified as securities and those that are not. For crypto-assets that are securities, riskless principal transactions were already permissible under existing law because the bank acts without recourse (i.e., does not assume customer risk). For crypto-assets that are not securities, the OCC extends the same reasoning, framing the activity within the broader 'business of banking' under U.S. law, which is not narrowly defined and allows banks to take on new functions that logically extend their traditional roles.
Major Banks Move In: Bank of America and PNC Lead the Way
Concurrent with the OCC's regulatory signal, major U.S. banks have taken concrete steps. Last week, Bank of America announced it would allow its wealth management clients to allocate 1%–4% of their portfolios to digital assets. This applies across Merrill, Bank of America Private Bank, and Merrill Edge, enabling more than 15,000 advisers—previously restricted—to proactively recommend crypto-related services.
Earlier today, PNC Bank became the first major U.S. bank to offer eligible Private Bank clients direct bitcoin trading through its own platform, powered by Coinbase's infrastructure. Qualified clients can buy, hold, and sell bitcoin without using an external exchange. This service follows a strategic partnership with Coinbase announced in July. These moves demonstrate that traditional banks are moving from passive observation to active deployment as regulatory clarity increases.
Key Points of Interpretive Letter 1188: Legal Basis for Riskless Principal Crypto Transactions
The OCC's interpretive letter provides a detailed legal analysis. The core logic is that riskless principal transactions in crypto-assets are a permissible banking activity. The bank does not hold inventory for a significant period and acts without recourse (no customer credit risk), similar to existing brokerage and custody services.
To determine permissibility, the OCC applied four factors: (1) similarity to recognized banking activities; (2) benefit to banks and customers; (3) nature of the risks involved; and (4) whether state-chartered banks are authorized to perform such activities.
Analysis shows that riskless principal crypto transactions align with traditional brokerage and custody services; they benefit customers by providing regulated access to crypto-assets and offer banks new revenue streams; the risks (such as settlement risk) are familiar to banks; and state regulatory frameworks do not prohibit similar activity, supporting federal permissibility.
This letter provides a clear legal framework for banks to participate in crypto intermediation, likely prompting more traditional banks to follow PNC and Bank of America in launching compliant crypto services.