New federal guidance allows banks to use crypto for fees

Core Insights - The U.S. Office of the Comptroller of the Currency (OCC) has issued new guidance allowing national banks to hold crypto-assets on their balance sheets specifically for paying blockchain network fees, marking a significant step in integrating crypto into regulated banking infrastructure [1] - The OCC's Interpretive Letter 1186 confirms that banks can hold crypto-assets necessary for anticipated network fees and for testing crypto-related platforms, provided these activities comply with applicable laws [1][4] - This decision builds on previous OCC guidance, creating a comprehensive framework for banks to engage in crypto custody, execution services, and other related activities [3][4] Group 1: Regulatory Framework - The OCC's latest decision is part of a broader framework that includes earlier letters confirming banks can provide crypto custody and execution services, including outsourcing these functions with risk controls [3] - The OCC reiterated that banks can buy and sell assets held in custody at the customer's direction, aligning with prior guidance from 2020 [4] Group 2: Operational Implications - Allowing banks to hold crypto for gas fees alleviates practical bottlenecks for institutions developing blockchain-based services, enabling essential functions like asset transfers and trade settlements [4] - The ruling effectively permits banks to manage network fees incurred for permissible activities, which includes custody, trade execution, stablecoin reserves, and node operation [5] Group 3: Industry Impact - The decision aligns with calls from industry leaders for regulatory clarity, with Coinbase's CEO emphasizing that enabling banks to handle operational crypto would facilitate traditional financial institutions' direct interaction with the on-chain economy [6]