Custody of Crypto Assets by National Banks: OCC Interpretive Letter Confirms National Bank Authority to Provide Cryptocurrency Custody Services

Sullivan & Cromwell LLP - July 23, 2020
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On July 22, 2020, the Office of the Comptroller of the Currency (the “OCC”) released publicly an interpretive letter confirming the authority of a national bank to provide cryptocurrency custody services for customers, including by holding the unique cryptographic keys associated with cryptocurrency. Noting that several states had already passed legislation and promulgated regulations allowing banks chartered in those states to offer custody services for digital assets, the OCC concluded that a national bank could offer cryptocurrency custody services to its customers as part of its existing custody business. Acknowledging that safekeeping of customer assets has long been a core service provided by banks, and that the OCC’s regulations explicitly authorize national banks to perform through electronic means any activities that they are otherwise authorized to perform, the letter concludes that providing custody services for cryptocurrency falls within the authority of national banks. The letter also states that national banks may provide banking services to any lawful business, “including cryptocurrency businesses, so long as national banks effectively manage the risks and comply with applicable law”, including the OCC’s regulations governing fiduciary obligations, where relevant.