The OCC of the United States has just allowed banks to act as intermediaries in cryptocurrency transactions under the “riskless principal” model, meaning they stand between the buyer and the seller without needing to directly hold Bitcoin, Ethereum, or other cryptocurrencies on their balance sheet.
The new move from the OCC provides a clearer legal framework for traditional banks participating in the digital asset market, opening up the possibility for deeper integration between traditional finance and the global cryptocurrency market.
MAIN CONTENT
OCC allows U.S. banks to act as intermediaries in crypto transactions without needing to directly custody assets.
The new regulations are expected to boost banks' participation in the digital asset market.
Bitcoin, Ethereum, and major cryptos may benefit from increased liquidity and institutional demand.
The new OCC guidance allows banks to act as intermediaries in crypto transactions.
OCC's Interpretive Letter 1188 confirms that U.S. banks are permitted to engage in crypto transactions under the riskless principal model, acting between buyers and sellers without the banks themselves needing to hold cryptocurrencies on their balance sheets.
The Interpretive Letter 1188 issued by the Office of the Comptroller of the Currency (OCC) has officially paved the way for banks to act as intermediaries in cryptocurrency transactions. Accordingly, banks can buy crypto from one party and sell it to another, as long as the transaction is structured as a riskless principal transaction, similar to securities transactions.
The key point is that banks are not required to directly custody Bitcoin, Ethereum, or other digital assets. Instead, they act as order-matching intermediaries between both sides, reducing market risks on the balance sheet while still generating revenue from fees or spreads, depending on the business model and internal approvals.
This guide clarifies that crypto trading intermediary services fall within the 'business of banking', meaning they are legally permitted activities for national banks in the U.S. This removes a significant portion of the previous legal ambiguity regarding whether banks can facilitate cryptocurrency transactions for institutional and individual customers.
Conducting crypto-asset transactions under a riskless principal model is part of banking operations and is permitted for national banks.
– Michael J. Hsu, Acting Director of the OCC, OCC Interpretive Letter 1188
Currently, the public response from leaders in the finance and crypto industries is relatively limited. However, many analysts expect this document to generate interest from institutions, as banks now have clearer legal grounds to provide cryptocurrency transaction support services to customers.
Implications for the banking system and the crypto legal framework.
The new OCC guidance enhances regulatory clarity for banks wishing to engage in the crypto market, helping them reduce compliance risks, easily design service products around digital asset transactions, and coordinate with regulators in supervising activities.
In the context of traditional financial institutions increasingly interested in providing services related to digital assets, OCC's affirmation of the 'validity' of crypto transactions under the riskless principal model could encourage many banks to establish dedicated trading desks. This not only expands options for customers but also introduces additional risk governance and compliance standards from the banking system into the crypto market.
In the long term, bank participation could drive convergence between traditional financial infrastructure and crypto exchanges/service institutions. Collaborative models such as using banks as fiat–crypto bridges, providing payment services, third-party custody, or clearing could evolve more rapidly as the legal framework becomes clearer.
Bitcoin market developments as the OCC reshapes the banking role.
Bitcoin currently has a market capitalization of trillions of USD and accounts for more than half of the crypto market capitalization, so any policy changes that allow banks to participate in crypto trading could significantly impact liquidity, market structure, and the level of acceptance among institutional investors for BTC.
Bitcoin (BTC) is currently trading around $92,155.91, with a market capitalization of $1.84 trillion, accounting for 58.38% of the total cryptocurrency market capitalization. In the past 24 hours, BTC's price has increased by 2.13%, but it has decreased by 19.17% in the last 90 days, according to data from CoinMarketCap.
Although short-term price volatility is still influenced by market sentiment and macro factors, many analysts believe that the OCC allowing banks to act as intermediaries in crypto transactions could gradually boost institutional demand for Bitcoin. As traditional banks can provide order matching services and support transactions, access to BTC for corporate clients, funds, and high-net-worth individuals becomes more convenient.
From a market structure perspective, bank participation can improve liquidity due to larger, more closely managed and monitored order flows. Over time, this may reduce spreads, increase order book depth, and attract more quantitative trading strategies, arbitrage, and hedging using Bitcoin as an underlying asset.
Furthermore, traditional banks acting as intermediaries between individuals/institutions and the crypto market can help raise KYC/AML standards, reduce manipulation risks, and increase market reliability for new investors. All these factors have the potential to reinforce Bitcoin's position as a key asset in the cryptocurrency ecosystem.
Potential impact on Ethereum and other large digital assets.
Although Bitcoin dominates in market capitalization, large digital assets like Ethereum can also benefit from the new legal framework. When banks set up crypto trading desks, they cannot overlook high-liquidity assets with multiple applications like ETH, thereby expanding access for institutional investors.
Bank participation as intermediaries in transactions not only helps increase liquidity for Bitcoin but also for trading pairs related to Ethereum and other large-cap tokens. This could lead to a more diverse digital asset ecosystem under the 'roof' of banks, with derivative products, hedging services, and financing solutions related to various types of crypto, not just BTC.
Frequently Asked Questions
What is OCC's Interpretive Letter 1188?
Interpretive Letter 1188 is a guidance document issued by the Office of the Comptroller of the Currency (OCC), confirming that national banks in the U.S. are permitted to engage in cryptocurrency transactions under the riskless principal model, acting as intermediaries between buyers and sellers without needing to directly hold crypto.
Do banks have to hold Bitcoin or crypto when acting as intermediaries?
According to OCC guidance, banks are not required to directly hold Bitcoin or other cryptos on their balance sheets when conducting transactions under the riskless principal model. They only need to buy from one party and sell to the other immediately, acting as an intermediary for order matching.
How does OCC's guidance affect the Bitcoin market?
The new OCC guidance may help banks engage more deeply in Bitcoin trading activities, improve liquidity, and expand access for institutional investors. In the long run, this could support BTC's position in the digital asset ecosystem, even though prices remain influenced by many other factors.
Source: https://tintucbitcoin.com/occ-cho-phep-ngan-hang-moi-gioi-tien-dien-tu/
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