OCC Letter 1188 confirms U.S. banks can run riskless principal crypto trades, capping a 2025 rollback of Fed, FDIC and OCC hurdles on custody and tokenized rails.
Summary
- Interpretive Letter 1188 lets national banks match offsetting crypto trades between customers as riskless principals without holding inventory.
- 2025 moves from OCC, Fed and FDIC scrapped pre-clearance regimes while reaffirming custody, stablecoin, and tokenized-settlement activities as core banking.
- Regulated banks can now plug crypto rails into wealth, corporate and private banking channels, tightening supervision but widening on-chain distribution.
The Office of the Comptroller of the Currency published Interpretive Letter 1188 on December 9, confirming that national banks have the authority to engage in riskless principal crypto-asset transactions, according to the regulatory guidance.
OCC an FDIC creating more clearance on stablecoins
The letter allows banks to act as intermediaries by purchasing cryptocurrency from one customer while simultaneously selling to another without holding coins in inventory. The guidance represents the latest in a series of regulatory moves in 2025 that have removed barriers to bank participation in digital asset markets.
Interpretive Letter 1188 established that national banks can act as principals in crypto-asset transactions with one customer while simultaneously entering offsetting transactions with another customer. The structure positions banks as intermediaries without requiring them to warehouse coins on their balance sheets, functioning in a capacity equivalent to that of brokers acting as agents.
The guidance requires banks to conduct riskless principal activities in compliance with applicable law. Banks remain subject to Bank Secrecy Act and anti-money laundering requirements, third-party risk management standards, and trading-book controls while executing these transactions, according to the OCC.
The confirmation expands regulated distribution channels for crypto market activity by enabling banks to participate in trade flow without exposure to price volatility. Banks can now intermediate customer crypto trades through their own channels, potentially affecting spreads and settlement processes for wealth management, corporate banking, and private banking clients.
The December interpretive letter represents the latest step in a broader 2025 regulatory shift that has lowered barriers to bank participation in cryptocurrency markets. In November, the OCC stated that banks could hold small amounts of native tokens on their balance sheets to pay network gas fees and test permissible platforms, removing obstacles to running custody, tokenized settlement, and on-chain operations within banking institutions.
The May guidance reaffirmed and clarified that banks could provide crypto custody and execution services for customers while outsourcing those functions to qualified third parties, including sub-custodians, subject to standard third-party risk management frameworks. The clarification codified market practices that banks already employed.
In March, Interpretive Letter 1183 reset the regulatory framework by rescinding Letter 1179 and reaffirming the permissibility of crypto-asset custody, certain stablecoin activities, and participation in distributed-ledger networks. The OCC framed these functions as part of, or incidental to, the business of banking rather than novel activities requiring special treatment.
The Federal Deposit Insurance Corporation eliminated its 2022 pre-clearance notice regime in March, informing FDIC-supervised banks that they could engage in legally permissible crypto activities without prior approval, provided the risks were managed through normal examination processes. The shift moved from a regulatory pre-approval requirement to supervision through ordinary examinations.
The Federal Reserve withdrew its 2022 and 2023 crypto and dollar-token supervisory letters in April alongside two interagency risk statements. The changes were described as supporting innovation while the Board monitored banks through standard supervision. The action removed specific hurdles for state member banks exploring stablecoin and tokenized-deposit infrastructure.
In July, the Fed, OCC, and FDIC issued a joint statement confirming that banks could offer crypto-asset safekeeping services when conducted in compliance with existing rules, providing acknowledgment of the activity’s place within the regulatory framework without imposing new requirements.
The combined effect of the year’s regulatory moves created clearer authority for banks to custody, execute, intermediate, and operate on-chain infrastructure, including network fee payments. The removal of pre-clearance requirements at the FDIC and Fed reduced legal uncertainty and operational overhead for banks connecting to crypto settlement and tokenized payment systems.
The riskless principal authorization allows banks to enter the crypto trade flow as matched-principal routers for spot transactions without warehousing price risk. Banks maintain requirements to offset exposure immediately to preserve the riskless nature of transactions, keeping activities within existing risk management frameworks.
The regulatory clarity positions U.S. banks to offer customer interfaces with crypto execution operating behind existing wealth management and corporate banking relationships without requiring separate exchange accounts or introducing balance sheet crypto exposure, according to market analysts.
