Three major US banking regulators released comprehensive guidance Monday outlining requirements for banks engaging in cryptocurrency custody services, emphasizing the need for robust risk management protocols while clarifying that no new supervisory expectations are being established.
The Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) jointly addressed how existing banking laws and regulations apply to digital asset safekeeping services. The 7-page memorandum reinforces that banks must operate "in a safe and sound manner and in compliance with applicable laws and regulations" when providing crypto custody.
The statement arrives during a pivotal moment as the banking industry increasingly explores digital asset services under the Trump administration's crypto-friendly policies. The guidance provides much-needed clarity for financial institutions navigating the evolving regulatory landscape.
Two Distinct Custody Models: Fiduciary and Non-Fiduciary Services
The regulators outlined two primary approaches banks can adopt for cryptocurrency custody operations. The distinction centers on the level of legal responsibility and regulatory oversight required for each service model.
Fiduciary custody arrangements require banks to act as trustees, legally authorized to make decisions on behalf of clients. These services must comply with specific federal regulations under 12 CFR 9 or 150, alongside applicable state laws and additional legal provisions. Banks choosing this path assume greater legal responsibilities but can offer more comprehensive asset management services.
Non-fiduciary custody services allow banks to provide safekeeping without trustee responsibilities. However, these arrangements still mandate "robust protections to safeguard customers' digital assets," including comprehensive cybersecurity measures, data loss prevention protocols, and secure private key management systems.
Both models require banks to maintain "controlling the cryptographic keys associated with the crypto-asset in a manner that complies with applicable laws and regulations," ensuring proper custody standards regardless of the service structure chosen.
Regulatory Shift Reflects Pro-Crypto Policy Changes
The guidance represents a significant departure from previous restrictive approaches toward cryptocurrency under the Biden administration. Earlier policies created barriers for banks seeking to engage with digital asset businesses, often requiring extensive approval processes and imposing reputational risk considerations.
President Trump's crypto executive order in March established a federal framework designed to provide "friendly oversight" for US digital asset businesses. This policy shift enabled the FDIC to remove "reputational risk" as a supervisory factor, marking a substantial victory for the cryptocurrency industry.
The agency subsequently issued guidance allowing supervised banks to engage in crypto-related activities without prior approval, streamlining the process for financial institutions entering the digital asset space.
The timing coincides with the House of Representatives' "Crypto Week" initiative, where Republicans plan to advance three key pieces of legislation: the CLARITY Act, Anti-CBDC Surveillance State Act, and Senate's GENIUS Act, further demonstrating the shifting regulatory environment toward cryptocurrency acceptance.