U.S. Regulators Confirm Banks Can Custody Bitcoin and Crypto

Federal banking regulators have confirmed that U.S. banks can offer custody services for bitcoin and other crypto-assets. However, they must follow existing laws and maintain strong risk controls when doing so.

The clarification came in a joint statement from the Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC). While the statement does not introduce new rules, it reinforces banks’ existing obligations under U.S. law when handling crypto-assets.

Regulators Set Expectations for Banks Offering Crypto Services

According to the document, banks may hold crypto-assets on behalf of customers either in a fiduciary or nonfiduciary role. Those offering fiduciary services must comply with existing regulations such as 12 CFR 9 or 150, along with relevant state laws and other legal requirements.

Beyond regulatory obligations, regulators emphasized that safeguarding digital assets, especially when controlling cryptographic keys, requires advanced cybersecurity protocols and strict legal compliance. They warned that handling bitcoin and other cryptocurrencies is not the same as managing traditional assets.

Banks must ensure they can protect against risks such as key loss, cyberattacks, and unauthorized transfers. Providing these services requires technical expertise, secure infrastructure, and ongoing monitoring of crypto-related technology.

In addition to these operational risks, the statement reminded banks that existing laws still apply. These include anti-money laundering (AML) rules, countering the financing of terrorism (CFT), and U.S. sanctions enforcement under the Office of Foreign Assets Control (OFAC). These requirements must be met regardless of the type of crypto-assets involved.

Regulators Stress Custody Controls

Before entering into any crypto custody services, banks must carry out a complete risk assessment. This includes understanding the nature of the assets, how they are managed, and what legal rules apply.

A key part of this process involves sub-custodians, who are third parties that may manage assets on behalf of the bank. Banks remain responsible for the actions of these third parties and must perform due diligence before choosing them.

To that end, that due diligence includes reviewing how sub-custodians handle cryptographic keys, their internal controls, and whether they follow industry-standard risk practices. Failing to do so could expose the bank to compliance and security issues.

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