The OCC's Digital Asset Framework: What Banks Can Now Do

The OCC’s Quiet Revolution

The Office of the Comptroller of the Currency’s digital asset interpretive letters have received less public attention than SEC enforcement actions or Congressional debates over FIT21, but they may be more consequential for the institutional tokenized securities market. The OCC supervises approximately 1,200 nationally chartered banks with combined assets exceeding $14 trillion — including the largest custodians, dealers, and clearing banks in the US financial system. When the OCC issues an interpretive letter authorizing national banks to perform a new activity, it does not merely permit that activity; it integrates it into the regulatory infrastructure of the most systemically important financial institutions in the country.

The three interpretive letters that define the OCC’s current digital asset framework — 1170, 1172, and 1174 — were issued between 2020 and 2021 under Acting Comptroller Brian Brooks, then reaffirmed under subsequent administrations, and most recently confirmed under 2025 OCC leadership as part of the broader regulatory pivot signaled by the Crypto Task Force and SAB 121 reversal. Together, they establish that national banks have the legal authority to provide crypto custody services, hold reserves backing stablecoins, and participate in blockchain network validation. The reaffirmation matters as much as the original letters — it signals that this authority is durable policy, not a transitional position that changes with administrations.

Interpretive Letter 1170: Crypto Asset Custody

OCC Interpretive Letter 1170, issued July 22, 2020, is the foundational document of the OCC’s digital asset framework. It establishes that providing cryptocurrency custody services for customers is a modern form of the traditional banking activity of safekeeping — an activity that national banks have performed since the nineteenth century for gold, securities certificates, and other valuables.

The Letter’s analysis proceeds from the principle that national banks have authority under the National Bank Act to perform activities that are “part of, or incidental to, the business of banking.” Safekeeping and custody of customer assets — holding them in a secure manner, maintaining records, and returning them on demand — is unambiguously within this category. The OCC concluded that digital assets held in cryptographic form, while technically different from physical assets held in a vault, satisfy the same economic function: the bank holds the asset on the customer’s behalf, maintains the custody record, and is responsible for returning the asset to its owner.

For nationally chartered banks, Letter 1170 opened the door to cryptocurrency custody as a bankable service. The practical implications were significant: BNY Mellon, the world’s largest custodian with $49 trillion in assets under custody, could now offer crypto custody services without needing a special charter or a subsidiary in Wyoming. The bank needed to develop the operational infrastructure, obtain its existing regulatory supervisors’ non-objection to specific custody programs, and build the key management systems required for secure crypto custody — but the legal authority to do so was settled.

Letter 1170 also addressed the more complex question of what custody means for digital assets. The OCC’s analysis established that holding private keys — the cryptographic credentials that authorize transactions on a blockchain — constitutes custody of the digital assets those keys control. This definitional clarity was essential: it gave banks a legally defensible framework for designing custody systems around private key management, consistent with existing safekeeping concepts.

Interpretive Letter 1172: Stablecoin Reserve Accounts

OCC Interpretive Letter 1172, issued September 21, 2020, addressed the specific question of whether national banks can hold deposit accounts for stablecoin issuers as reserve backing for their stablecoins. The answer was yes, subject to conditions.

The Letter’s significance is the OCC’s explicit recognition that stablecoin issuers — non-bank entities — can maintain reserve accounts at nationally chartered banks that back their digital payment tokens. This is functionally analogous to a prepaid card issuer holding customer funds in a bank custodial account, which national banks have done for decades. The OCC’s extension of this concept to stablecoin reserves was analytically straightforward but practically important: it gave major stablecoin issuers access to the most stable, regulated, and FDIC-backed deposits in the US financial system.

For USDC issuer Circle, Letter 1172 enabled the reserve structure that makes USDC the benchmark institutional stablecoin. Circle holds a significant portion of USDC reserves in accounts at US national banks, giving USDC holders the equivalent of bank deposit safety on their stablecoin reserves. This reserve structure is why USDC remained substantially stable during the March 2023 Silicon Valley Bank crisis — even though Circle had $3.3 billion of reserves deposited at SVB — because the larger portion of reserves was distributed across other national bank accounts and held in Treasury facilities.

Letter 1172 also created the conceptual framework for the GENIUS Act’s reserve requirements. The GENIUS Act’s mandate that payment stablecoin reserves be held in US currency, Treasury bills, Fed Reserve accounts, or repo backed by Treasuries is directly compatible with the OCC’s 1172 framework, which permitted national bank deposits as a reserve component. The regulatory architecture of stablecoin reserve safety is built on the OCC’s foundation.

Interpretive Letter 1174: Blockchain Node Validation

OCC Interpretive Letter 1174, issued January 4, 2021, addressed the most technically complex question: can national banks participate in independent node verification networks — i.e., run blockchain validator nodes — as part of their banking activities?

The OCC’s answer was again affirmative. The Letter found that participating in blockchain networks by operating nodes — validating transactions, maintaining consensus with other network participants, and processing settlement — is a permissible banking activity because it is functionally equivalent to other payment settlement activities that banks have historically performed. Banks have long operated payment processing infrastructure, cleared checks, validated transaction data, and participated in interbank settlement networks like SWIFT and Fedwire. Running a blockchain node is analytically similar: the bank validates transaction data and participates in a distributed settlement network.

The practical implications of Letter 1174 are more forward-looking than the custody and stablecoin reserve letters. As tokenized securities markets develop, settlement will increasingly occur on blockchain networks — either public networks like Ethereum or private/consortium networks like JPMorgan’s Onyx or Broadridge’s DLR system. Letter 1174 establishes that national banks can operate the validator node infrastructure that makes those settlement networks function, integrating banks into blockchain settlement in the same way they are integrated into traditional payment network infrastructure.

For the tokenized RWA market, Letter 1174 means that major custodians and clearing banks can run validation nodes on tokenized securities settlement networks without regulatory uncertainty about whether this constitutes impermissible bank activity. BNY Mellon Digital, State Street Digital, and other major custodians can participate in blockchain settlement infrastructure as a complement to their traditional settlement roles.

Anchorage Digital: The OCC National Bank Charter

The most consequential application of the OCC’s digital asset framework is Anchorage Digital Bank NA, which became the first federally chartered digital asset bank in US history when the OCC granted its conditional national bank charter on January 13, 2021. Anchorage Digital — founded in 2017 by Diogo Monica and Nathan McCauley — built its platform around institutional-grade custody infrastructure, and the OCC charter transformed it from a state-regulated trust company into a nationally chartered bank with the broadest authorization to provide digital asset custody, trading, and financing services.

The Anchorage OCC charter matters for the tokenized RWA market for a structural reason: national bank status provides preemption from state-by-state money transmitter licensing requirements. Under the National Bank Act and the Supremacy Clause of the US Constitution, national bank activities are generally preempted from state regulation — with certain exceptions for consumer protection. A crypto custody and settlement firm operating as a national bank does not need separate money transmitter licenses in New York, California, Texas, and the other 47 states; its OCC charter provides nationwide authority.

This preemption benefit is significant. A non-bank digital asset firm serving institutional clients nationally must obtain money transmitter licenses in each state where it operates — a process that takes 12-24 months, costs millions of dollars in regulatory fees and compliance infrastructure, and subjects the firm to 50 separate examination programs. The OCC charter eliminates this fragmentation. For large institutional custodians considering entry into the digital asset custody market, the OCC charter pathway — or partnering with a national bank — is substantially more efficient than building a state-by-state compliance infrastructure.

The Custodia Litigation and Fed Master Account Restrictions

The OCC’s permissive framework for national bank digital asset activities exists in tension with the Federal Reserve’s historically restrictive approach to crypto bank access to Fed master accounts. Custodia Bank — a Wyoming Special Purpose Depository Institution that applied for a Fed master account and Federal Reserve membership — was denied by the Kansas City Fed in 2023 and lost its subsequent federal court challenge in 2024 when the Tenth Circuit upheld the Fed’s broad discretion over master account applications.

The Custodia case is significant because it illustrates the gap between OCC-authorized activities and Fed-controlled access to the core US dollar payment system. A bank can have an OCC charter and the legal authority to perform digital asset custody and stablecoin services, but without Fed master account access, it must settle US dollar transactions through a correspondent bank — adding a layer of counterparty risk and settlement delay that undermines the efficiency advantages of blockchain settlement.

The practical result of the Custodia decision is that the crypto banking industry’s access to the Fed’s payment system is constrained by the Fed’s case-by-case discretion, even where OCC or state banking authority to perform the underlying activity is clear. For tokenized RWA market participants, this means that even fully regulated, OCC-chartered digital asset banks face structural limitations on their ability to provide T+0 USD settlement — a limitation that will persist until the Fed develops a clearer framework for master account access by digital asset banking institutions.

The Federal Reserve’s January 2023 policy statement on novel activities supervision — which requires banks engaged in “novel” activities including crypto to notify the Fed and obtain supervisory non-objection before proceeding — adds another layer of pre-approval requirement that the OCC’s interpretive letters do not eliminate. The OCC and Fed supervision frameworks are complementary but not fully coordinated, and navigating both requires specific regulatory expertise.

Exhibit: OCC Digital Asset Interpretive Letters — Scope and Limitations

Strategic Implications for Tokenized Asset Custodians

The OCC framework creates a clear competitive advantage pathway for institutions willing to invest in national bank digital asset capabilities. Banks operating under OCC Letters 1170, 1172, and 1174 can offer tokenized securities custody, stablecoin reserve services, and blockchain settlement infrastructure under a unified regulatory framework — without state-by-state licensing — and with the capital adequacy, audit, and examination standards that institutional clients require.

For asset managers choosing custody partners for tokenized fund products, the OCC framework matters in the due diligence process. A nationally chartered bank offering digital asset custody is subject to OCC examination, capital requirements, and supervisory standards that provide investor protection certainty. A state-chartered trust company or a non-bank digital asset firm operates under more varied regulatory oversight — potentially adequate but less uniform.

The SAB 121 reversal, in combination with the OCC interpretive letters, creates the conditions for major custodians — BNY Mellon, State Street, JPMorgan — to scale their digital asset custody and settlement services to match the growth of tokenized securities markets. Institutional investors in tokenized RWA products should monitor which custodians are investing in these capabilities and build counterparty relationships accordingly. The broker-dealer registration framework and the OCC custody authority work in parallel — firms need both to provide the full suite of services that institutional tokenized securities clients require.