OCC Confirms Riskless Principal Transactions in Crypto Assets by Banks Are Permissible
The Office of the Comptroller of the Currency ("OCC") confirmed national banks may engage in riskless principal crypto-asset transactions.
On December 9, 2025, the OCC issued Interpretive Letter #1188 to confirm that national banks may engage in riskless principal crypto-asset transactions, including transactions in assets that are not securities. Riskless principal transactions occur when an intermediary purchases an asset from one counterparty for immediate resale to a second counterparty. Banks are generally permitted to engage in such transactions and the OCC does not view involvement of crypto assets in the transactions as preclusive to banks' engagement.
The OCC held that riskless principal crypto-asset transactions are permissible as a "part of the business of banking," and weighed the four factors set forth in 12 C.F.R. § 7.1000(c)(1):
Functional Equivalent/Logical Outgrowth to Recognized Banking Activity. The OCC equated riskless principal transactions to traditional bank functions (e.g., securities conduit lending) and noted that banks should not be prohibited from continuing in their traditional role just because they are dealing with crypto assets. Additionally, the OCC considered riskless principal crypto-asset transactions a logical outgrowth of the custody services already provided to custody customers.
Strengthens Benefit to Customers/Business. The OCC reasoned riskless principal crypto-asset transactions would benefit bank customers and business by: (i) adding additional services; (ii) offering a regulated platform; and (iii) banks being better suited to manage risk.
Similar Risks Already Assumed by Banks. The OCC noted the main risk differentiator for crypto-asset transactions is the underlying asset and the technology used. The OCC explained, however, that credit risk still exists, but "banks are experienced in managing this risk." Also, the OCC reasoned that banks are allowed to engage in permissible crypto-activities (e.g., foreclose on crypto-asset collateral) and are experienced in managing the operational risk associated with such transactions.
Authorized for State-Chartered Banks. The OCC reasoned the fourth factor does not weigh against its conclusion because of: (i) longstanding state authority allowing riskless principal securities transactions; and (ii) no current state prohibition against the transactions.
The OCC's confirmation marks another step by the regulator to open the door to banks' involvement with crypto assets alongside other banking functions. National banks should note this letter was issued in response to facts presented by recent applicants, and a different factual scenario could lead to a different result. National banks should also make note of the OCC's "technology neutral" stance on what activities it deems permissible.
