During the first Trump administration, Acting Comptroller of the Currency, Brian Brooks, issued several interpretive letters allowing banks to perform certain cryptocurrency activities. Several months after the Biden administration took office, a new Comptroller letter (no 1179) said banks needed to get a non-objection letter before participating in these crypto tasks. Now the pendulum has swung back with new Acting Comptroller Rodney Hood issuing yet another letter that rescinds 1179, removing the need for banks to ask for permission in advance.
The three sets of activities that the OCC green lighted under Brian Brooks were:
- allowing banks to provide crypto custody (which was made almost impossible by the recently rescinded SAB121)
- allowing banks to take deposits for stablecoin reserves, and
- allowing banks to host nodes on a blockchain for the purposes of participating in stablecoin transactions, including as a validator.
The purpose of the 2021 OCC letter (1179) requiring banks to first get permission, was to ensure banks conducted themselves in a safe and sound manner. Now the OCC says that based on its supervisory experience, it’s no longer necessary.
“This rescission is intended to reduce burden, encourage responsible innovation, and enhance transparency,” it wrote.
We’d also observe that the OCC is the preferred regulator in the recent stablecoin bills, perhaps implying that its review of the safety and soundness was purposeful, rather than to act as a blocker.
Ex comptroller: it protected banks from crypto crash
Previous Acting Comptroller Michael Hsu issued the rescinded letter. He recently said he was proud of the OCC’s achievements in preventing the fallout from the crypto crash(es) of 2022 impacting banks.
“We just made sure to tell banks, look, you can do crypto, but it’s got to be safe, sound and fair, and you have to demonstrate it to us,” he said during an Intrafi podcast. “So a lot of banks that were kind of crypto curious: Yeah, not worth the trouble. It’s too hard to figure out. And that limited contagion from one to the other.”
Meanwhile, acting Comptroller Hood is a stand in, while the Senate confirms Trump’s nominee Jonathan Gould, who worked with former Acting Comptroller Brian Brooks at both the OCC and (briefly) crypto firm Bitfury. Gould is currently a partner with Jones Day.
