Major U.S. Agencies Lift Barriers for Crypto Custody
U.S. banks can now legally hold crypto on behalf of clients, as regulators have issued long-awaited guidance officially greenlighting crypto custody services. In a joint statement released Monday, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) detailed how banks can offer custody solutions without running afoul of regulations.
These updated instructions replace older warnings and restrictions that had previously discouraged banks from entering the digital asset space. This move follows an April rollback of the 2022 rule requiring prior notification before banks engaged in any crypto-related activities.
Strict Conditions: Crypto Custody Is Not a Free Pass
Although cleared to proceed, banks must first build a solid operational and compliance infrastructure. The regulators emphasized that crypto custody involves control of private cryptographic keys—and mishandling those keys can jeopardize client assets.
That means every department involved—from tech to compliance—must understand crypto mechanics, and training should be enforced across the board. Banks must also develop contingency plans from day one, with systems capable of adjusting to crypto’s fast-moving dynamics.
Outsourcing Allowed—But Responsibility Remains
Banks are permitted to use sub-custodians or third-party tech providers, but they retain full responsibility for asset safety. According to the joint statement:
That includes due diligence on how private keys are created, secured, and destroyed—and assessing potential fallout if the third party faces bankruptcy or technical failure.
Even banks handling custody in-house but relying on third-party software or hardware must perform a risk assessment. Regulators advised banks to weigh the risks of purchasing technology versus building their own, stressing that crypto custody isn’t a plug-and-play solution.
Auditing, Oversight, and External Help Required
The statement also made it clear that banks must implement targeted audit programs. These should review key generation processes, transfer protocols, and whether staff possess crypto-specific expertise.
If internal capabilities fall short, regulators advise that banks must bring in “external resources with sufficient independence” to manage or assess crypto custody services.
These measures aim to avoid incidents like key loss, system failures, or security breaches that could threaten customer trust or institutional integrity.
New Era Begins as Crypto Goes Institutional
With this ruling, crypto custody officially enters mainstream U.S. banking—marking a sharp policy shift under the Trump administration. As banks begin integrating these services, they must navigate new technical and legal terrain, while staying under the microscope of federal supervision.
This regulatory green light may fuel greater adoption of crypto by institutions and accelerate Wall Street’s embrace of digital assets—but only if banks rise to the challenge of secure, compliant implementation.
