On July 23, 2020, the Office of the Comptroller of the Currency (OCC) released Interpretive Letter #1170 (Letter) confirming that safekeeping and custody of cryptocurrency and crypto-assets (collectively, cryptocurrency) are traditional banking services and, therefore, are permissible activities for national banks and federal savings associations. The Letter also provides the usual admonition that banks may provide permissible services as long as they manage the risks and comply with applicable law, which, for cryptocurrency-related services, involves additional technological and practical challenges.
Banks have long provided safekeeping and custody services for their customers, and, over time, these services evolved along with the business of banking to now include safekeeping and custody of various physical and electronic assets. There is a well-established body of laws, regulations, and guidance supporting banks acting in both fiduciary and nonfiduciary capacities when performing such safekeeping and custody activities. The Letter recognizes this evolution, and states that safekeeping and custody of cryptocurrency is a logical outgrowth of national banks’ existing authority.
Custody services for cryptocurrency generally involve holding the unique cryptographic keys used to access units of cryptocurrency in “hot” or “cold” wallets and providing related services, including facilitating the customer’s cryptocurrency and fiat currency exchange transactions, transaction settlement, trade execution, record keeping, valuation, tax services, and reporting. While there is a well-developed body of law for custody services, the OCC found that the uniqueness of cryptocurrency-related services requires banks to pay particular attention to certain practices.