Three federal agencies of the United States government outlined the risks facing banks if they decide to custody crypto on behalf of their clients, according to a document published jointly by the agencies on Monday.
While the announcement said that the document “does not create any new supervisory expectations,” it could provide a framework for banks that are considering entering the crypto space, as some reports have suggested they are.
According to the document, titled “Crypto-Asset Safekeeping by Banking Organizations,” a bank’s risk assessment would include the ability to understand a complex and evolving asset class; the potential of liability if crypto assets were lost; and legal and compliance responsibilities associated with the Bank Secrecy Act and Anti Money Laundering regulations.
“Providing crypto-asset safekeeping services may entail significant resources and attention,” it reads. The three federal agencies responsible for the document are the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System.
Often, financial institutions use third parties to custody their crypto assets. Asset manager BlackRock, for instance, has used Coinbase and later Anchorage for the custody of its Bitcoin (BTC). BNY Mellon, the US oldest bank, also offers custody of digital assets for clients.
The document notes that banks are responsible “for the activities performed by the sub-custodian.” This advice could be significant in the future if a bank’s custodian is hacked and the crypto is lost.
The agencies write that audit programs are essential and should address the nuances of crypto assets, including key generation, controls related to the transfer and settlement of assets, and staff expertise. If the audit programs don’t exist within the bank itself, “management should engage appropriate external resources…to assess crypto-asset safekeeping operations.”
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More favorable regulatory environment may appeal to banks
There have been indications that some banks are considering an entry into crypto. In May, The Wall Street Journal reported that a group of big banks was in “early talks” to issue a joint crypto stablecoin.
The banks may see the current regulatory environment as more favorable, especially as governing bodies have made a move into crypto easier. For instance, the Federal Reserve has eliminated the “reputational risk” criteria from its oversight of banks, which critics say was used to unfairly target crypto businesses.
Also in May, Acting Comptroller Rodney Hood wrote a letter to banks and federal savings associations saying they could buy and sell cryptocurrency that they are custodying at the direction of their clients. In 2025, the FDIC has undergone a “regulatory reset” and eased crypto restrictions for banks.
Some native crypto companies are looking to go the opposite route: becoming a bank themselves. On July 2, Ripple, the creator of XRP (XRP), applied for a banking license with the OCC. Circle, the creator of stablecoin USD Coin (USDC), has done the same.
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