• The OCC’s guidance provides a clear path for banks to engage in digital asset-related activities, allowing them to hold crypto on their balance sheets for permissible activities.
• This move is expected to boost institutional adoption of cryptocurrencies, enabling banks to provide custody and transaction facilitation services to their customers.
• The OCC’s guidance cites the GENIUS stablecoin bill, signed into law in July, which establishes a regulatory framework for payment stablecoins.

The US Office of the Comptroller of the Currency (OCC) has given the green light to national banks to hold a limited number of cryptocurrencies on hand for the payment of on-chain gas fees, marking a major regulatory breakthrough for the crypto space.

The move by the bank regulators provides a clear path for banks to engage in digital asset-related activities and also allows them to have crypto on their balance sheets from time to time. The relief given through the OCC’s guidance to those institutions that have to deal with the difficult world of cryptocurrencies could not be more welcome.

Guidance Builds on Existing Framework

The OCC’s latest guidance to banks is based on a letter from May, in which the same agency gave the go-ahead to companies to conduct digital asset operations for customers and to outsource certain crypto activities. With this news, the OCC is making it clear that it is an ongoing process to put into place a well-defined regulatory framework for banks to deal with cryptocurrencies.

The bank regulator, by giving the go-ahead to banks to keep crypto for gas use, is thus recognising the importance of these assets as facilitators of transactions on blockchain networks.

Also Read: Major Win for Crypto: OCC Grants Banks Full Access to Digital Assets

GENIUS Act Paves Way for Stablecoin Regulation

The guidance by the OCC refers to the GENIUS bill that deals with stablecoins and that was transformed into a law in July. It provides a framework for the regulation of payment stablecoins.

As the US Treasury and Federal Reserve work on the finalisation of regulations, the industry remains eager for more clear-cut rules on stablecoin issuance and management. The OCC’s guidance is a way to implement the GENIUS Act, which is intended to offer a full regulatory framework for stablecoins.

Also Read: Coinbase Calls for Clear GENIUS Act Rules to Strengthen Stablecoin Innovation

Increased Institutional Adoption Expected

Such regulatory modifications are a big encouragement for institutional investors to use cryptocurrencies as a utility, thus banks are in a position to hold crypto assets for operational purposes. In collaboration with the OCC guidance, banks become the most suitable channel to deliver the wanted services to their patrons inclusive of custody and transaction facilitation. Crypto as an industry will continue to thrive and mature as the regulatory environment turns.

Also Read: US OCC Lifts Anchorage Digital’s Consent Order, Permits Full Crypto Bank Charter

Looking Ahead to Future Regulations

The industry has got from the OCC a very helpful piece of advice. The only problem is that they are still waiting for the final word on regulations on things like stablecoins and digital asset market structure before they can really breathe easy.

Lawmakers are putting their best efforts into pushing through a digital asset market structure bill, which in turn would give more clarity to crypto regulation. As the regulatory landscape keeps changing, the players involved need to be on their toes and ready to make adjustments accordingly.

Also Read: Coinbase Custody Set to Grow with Proposed OCC Charter