Good News for the Cryptocurrency Sector from the US Banking Regulator

The US national banking regulator has announced that banks can act as intermediaries in crypto transactions.

The new guidance is being considered the Trump administration's latest move to narrow the gap between the traditional financial sector and the crypto ecosystem.

According to guidance published by the U.S. Office of the Comptroller of the Currency (OCC), banks will be able to facilitate crypto assets in what are known as “risk-free principal” transactions. In this model, banks buy assets from one counterparty while simultaneously selling them to another, thus avoiding holding the asset in their inventory. The OCC noted that only “occasionally” would banks hold these assets for short periods of time.

This move is a continuation of President Donald Trump's welcoming approach to the crypto industry. The administration has been rewriting crypto regulations and removing some restrictions, while the Trump family is also directly involved in the industry through various crypto initiatives.

But critics say such regulations strengthen ties between the banking system and the highly volatile, relatively weakly regulated crypto market, increasing potential systemic risks.

The OCC's announcement comes after the rollback of many restrictions imposed during the Biden administration. In March, the OCC approved some crypto activities by banks and repealed guidance requiring banks to obtain regulatory approval before entering the sector.

*This is not investment advice.