by Kevin S. Schwartz, David M. Adlerstein, and Ledina Gocaj

Left to right: Kevin S. Schwartz, David M. Adlerstein, and Ledina Gocaj (photos courtesy of Wachtell, Lipton, Rosen & Katz)

In a significant shift, the Office of the Comptroller of the Currency (OCC) recently issued an interpretive letter empowering national banks to make their own business decisions related to cryptoasset products and services. The OCC guidance, which rescinds its prior-approval requirement for national banks to engage in cryptoasset activities, comes on the heels of an announcement that the FDIC is reassessing its own supervisory approach after disclosing “pause” letters that it had previously sent to 24 banks interested in crypto-related activities. Together, these developments signal an abrupt end to the bank regulators’ arbitrarily imposed ban on banks engaging in cryptoasset-related activities, an important step forward that we had endorsed.

A number of other changes in the broader regulatory landscape also bear implications for banks assessing the form and scope of their engagement with cryptoasset products and services. Federal regulators are pivoting away from a regulation-by-enforcement regime in favor of constructive collaboration with the cryptoasset industry leaders, in order to promulgate comprehensive rules to facilitate the provision of cryptoasset-related services. Additionally, banks’ determination whether to offer custodial services will be facilitated by the SEC’s rescission of Staff Accounting Bulletin 121 (which had required custodied cryptoassets to be accounted as balance sheet liabilities, with prohibitive regulatory capital effects). And some traditional financial institutions may pursue stablecoin issuance, the subject of bipartisan legislation pending in both the House and Senate.

There remains much work to be done by bank and nonbank financial regulators to address foundational questions that will shape the future of the cryptoasset industry. And banks themselves still must carefully examine how to safely and soundly navigate the idiosyncratic challenges of offering cryptoasset products and services. Nevertheless, the decision by banking supervisors to reverse a presumptive anti-crypto stance is a vital step toward facilitating the meaningful collaboration of industry leaders with financial regulators in supporting innovation while protecting consumers.

Kevin S. Schwartz is a Partner and David M. Adlerstein and Ledina Gocaj are Counsel at Wachtell, Lipton, Rosen & Katz. This post first appeared on the firm’s blog.

The views, opinions and positions expressed within all posts are those of the author(s) alone and do not represent those of the Program on Corporate Compliance and Enforcement (PCCE) or of the New York University School of Law. PCCE makes no representations as to the accuracy, completeness and validity or any statements made on this site and will not be liable any errors, omissions or representations. The copyright of this content belongs to the author(s) and any liability with regards to infringement of intellectual property rights remains with the author(s).