US banks can now hold crypto – but why is it only for gas fees?
An unnamed nationwide financial institution has requested the Office of the Comptroller of the Currency for permission to hold crypto by itself stability sheet to help blockchain-based companies. On Nov. 18, the OCC lastly answered.
In Interpretive Letter 1186, the company confirmed that nationwide banks could hold the native property wanted to pay blockchain “community charges,” clearing the best way for regulated establishments to run on-chain operations with out exterior workarounds.
The letter says a nationwide financial institution could pay blockchain “community charges,” generally referred to as gas, as an exercise “incidental to the enterprise of banking.” It could hold, as principal, the crypto property wanted to cowl these charges the place it has a “moderately foreseeable” operational want.
That one-sentence clarification simply eliminated the largest operational hurdle going through banks that wish to custody tokens or transfer stablecoins on public chains: you can’t settle transactions on Ethereum when you’re not allowed to hold ETH.
The ruling sits between plumbing and precedent. Network charges on public chains are paid within the native asset of the chain. Hence, any financial institution that desires to custody tokens, transfer buyer stablecoins, or run tokenized deposits on Ethereum or related networks wants some quantity of ETH or an equal in hand.
Until now, many banks both stayed away from on-chain exercise fully or leaned on third-party suppliers to entrance gas and wrap it right into a fiat payment.
The OCC is now saying banks can hold these native tokens themselves as principal in the event that they’re only wanted to run the pipes.
For massive custodians, tokenization desks, and stablecoin issuers working underneath the GENIUS Act framework, that shift means they can lastly be full-stack on particular networks with out outsourcing the final lacking piece.
How this connects to GENIUS and the March pivot
The OCC explicitly hyperlinks the letter to actions already allowed underneath the GENIUS Act stablecoin framework.
The company stated these actions would require banks to pay community charges “as agent for the client or as a part of its custody operations.”
The letter additionally builds on the broader March-May 2025 pivot, when the OCC rolled again outdated “you need to get prior approval for any crypto exercise” steering and reaffirmed that banks can interact in crypto custody, some stablecoin exercise, and participation in distributed-ledger networks with out pre-clearance, topic to straightforward danger administration.
Letter 1186 zooms in on a particular operational snag inside that new framework: you can’t do on-chain custody or tokenized deposits when you’re not allowed to hold the gas token.
American Banker quotes the letter’s logic instantly. If serving as a node is permissible, then “accepting the crypto asset community payment” and holding it for some interval should even be acceptable.
Otherwise, a financial institution could possibly be “virtually barred” from a lawful exercise. That reasoning provides massive custodians a cleaner path to take care of a small gas stability in-house quite than farming that perform to fintech intermediaries or staying off-chain altogether.
The similar letter confirms that banks can additionally hold restricted quantities of crypto as principal to check in any other case permissible crypto-asset platforms, whether or not constructed in-house or purchased from a 3rd social gathering.
In different phrases, the OCC is blessing small, working inventories of native tokens so banks can truly transfer transactions on the rails they’re allowed to make use of, and safely take a look at these rails earlier than committing buyer funds or balance-sheet capital to manufacturing deployments.
What modifications for custody and funds
For funds and settlement, this is about plumbing, not proprietary buying and selling. The change issues most for banks working stablecoin operations or tokenized deposit applications that choose public chains.
Those establishments now have specific authority to hold the gas wanted to course of buyer transactions with out structuring workarounds or counting on exterior liquidity suppliers.
The steering additionally covers conditions the place the financial institution pays charges on behalf of shoppers in its position as custodian or agent, particularly for GENIUS-compliant stablecoins.
Several summaries stress that holdings are restricted to “operational wants,” together with payment buffers for settlement and for testing custody platforms, not open-ended speculative positions.
That’s the excellence between payment custody and balance-sheet crypto publicity: banks can hold sufficient ETH to cowl foreseeable transaction volumes and platform testing, but they can’t construct a speculative guide or deal with native tokens as an funding asset.
The OCC’s framing makes clear this is operational stock, not a brand new asset class for financial institution treasuries.
For custody desks, the ruling removes a layer of counterparty danger and operational complexity.
Banks that beforehand relied on third events to offer gas now have the choice to internalize that perform, which shortens execution timelines and eliminates intermediaries that may themselves face liquidity constraints throughout community congestion or market volatility.
It additionally positions nationwide banks to compete extra instantly with crypto-native custodians which have all the time held native tokens as a part of their service stack.
The constraints banks nonetheless face
The OCC stresses that every one of this have to be performed in a “protected and sound” method and in compliance with present regulation.
The company’s press launch and commentary from the American Bankers Association spotlight that banks should slender the dimensions of those holdings, tie them to particular permissible actions, and run the same old market, liquidity, operational, cyber, and BSA/AML danger frameworks round them.
The OCC only oversees nationwide banks, whereas the Federal Reserve has, in a separate coverage assertion, continued to explain holding crypto as principal as “unsafe and unsound” for state member banks, creating cross-regulator friction even after the OCC loosened its stance earlier this yr.
That divergence means OCC-chartered banks have the inexperienced gentle to make use of operational gas balances. However, the broader US financial institution universe nonetheless faces combined indicators, relying on constitution kind and first regulator.
Banks may also must navigate value volatility. Native tokens like ETH fluctuate, which implies the greenback worth of a financial institution’s gas stock can swing day after day even when the token amount stays fastened.
The OCC’s “moderately foreseeable operational want” commonplace implies banks ought to measurement buffers conservatively and keep away from holding extra tokens that will expose them to speculative danger.
That creates a balancing act: hold too little and banks danger working out of gas throughout high-congestion durations. On the opposite hand, holding an excessive amount of implies carrying risky property on the stability sheet with no clear operational justification.
What’s at stake for the business
The broader query Letter 1186 solutions is whether or not US banks can take part in on-chain finance with out regulatory workarounds or structural disadvantages relative to crypto-native opponents.
For years, the implicit reply was no: banks may provide crypto companies only by staying off-chain, partnering with third events, or looking for case-by-case approval for actions that concerned direct token dealing with.
The March pivot opened the door to custody and stablecoin exercise. This letter removes the final operational blocker by permitting banks to hold the gas wanted to truly settle transactions.
If the stance holds, count on nationwide banks with present tokenization or stablecoin applications to convey gas administration in-house over the subsequent yr.
That shift gained’t change the elemental economics of on-chain funds. Still, it will consolidate extra of the service stack inside regulated establishments and cut back reliance on fintech intermediaries for fundamental settlement features.
It additionally units a precedent for how regulators may method different operational requirements that require holding native tokens, from staking for proof-of-stake networks to liquidity provisioning for decentralized-finance protocols that banks may finally contact.
The danger is that this stays an OCC-only place. If the Fed doesn’t observe go well with with related steering for state member banks, the end result is a two-tier system wherein constitution selection determines whether or not a financial institution can hold gas tokens in any respect.
That would push extra establishments towards nationwide charters for crypto-related companies, concentrating exercise underneath a single regulator and leaving state-chartered banks at a aggressive drawback for on-chain companies.
For now, Letter 1186 is permission, not coverage convergence, and the space between these two will outline how far US banks can truly go.
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