Today the Office of the Comptroller of the Currency (OCC), the national regulator for large banks such as JP Morgan Chase and Wells Fargo, issued an Interpretive Letter 1179 that puts in place regulatory barriers that will slow the fast-growing cryptocurrency industry’s entry into the US Banking system. Acting Auditor Michael Hsu has effectively reprimanded the work of former Acting Auditor Brian Brooks by introducing higher risk management thresholds before a bank engages in crypto asset banking activities.
According to Hsu: “… Because many of these technologies and products involve novel risks, banks must be able to demonstrate that they have appropriate risk management systems and controls in place to operate them securely. This will ensure that crypto-asset activities that take place within the state regulatory perimeter are carried out responsibly. ”
However, in the interpretative letters issued to banks in 2020 – in particular the interpretative letters 1170, 1172 and 1174 – it was stated that banks that use cryptocurrencies as part of their permitted banking activities must comply with the principles of security and solidity.
In summary, below are links to each of these Interpretative Letters and the topic that each letter addresses and that addresses The OCC’s new guidelines:
Declaration 1170 – Banks are allowed to hold cryptocurrencies;
Interpretive Letter 1172 – Banks can hold US dollar reserves against stablecoins;
Interpretive Letter 1174 – Banks can use ‘INVN’ (blockchain) nodes and stablecoins for payment activities;
Interpretive Letter 1176 – The power of the OCC to establish national banks that limit their activities to fiduciary powers;