This illustration photograph taken on November 22, 2024 in Istanbul shows coin imitations of the Bitcoin crypto. (Photo by Ozan KOSE / AFP) (Photo by OZAN KOSE/AFP via Getty Images)
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For years, banks have tip-toed around blockchain. They’ve explored pilots, commissioned research, partnered with fintechs, and debated tokenization strategies—all while waiting for regulators to clarify where the guardrails actually sit.
Earlier this week, the OCC issued Interpretive Letter 1186, confirming that national banks and federal savings associations may hold crypto assets as principal on their balance sheets when those assets are necessary to operate or support otherwise permissible banking activities. In practical terms, this includes maintaining small amounts of digital assets to pay blockchain network or gas fees, operating a tokenized deposit platform, or testing blockchain-based settlement systems.
This guidance does not authorize speculative activity to “crypto trading desks,” but instead represents a targeted, operational path forward. It also signals a shift from conceptual exploration to infrastructure enablement.
How Crypto Went From Niche To Mainstream Utility
For many institutions, until recently blockchain work has remained conceptual. Teams exploring tokenized deposits or real-time settlement frequently encountered a fundamental constraint: How to test or run blockchain-based functions if the institution is unable to hold the digital assets required to operate the rails? The OCC’s interpretation removes the friction point. Banks may now hold limited amounts of crypto strictly to facilitate pilots and operational processes. It acknowledges that modern settlement and payment systems may require new forms of digital “fuel,” even when underlying business models remain traditional.
Capabilities that were previously difficult to test, such as blockchain-based settlement pilots, tokenized deposit experiments, cross-platform interoperability testing, smart-contract-enabled workflows and on-chain know-your customer/anti-money-laundering proofs, now move into scope. For an industry that tends to move cautiously in the face of ambiguity, regulatory clarity itself is a catalyst for change.
What This New Crypto Regulation Means For Banks
Most banks are not prepared to tokenize their balance sheets. But the OCC’s guidance gives them a clearer path to modernize the rails beneath their core services. With permission to hold small amounts of crypto for operational use, institutions can finally begin working with tokenized deposits, programmable payments, and blockchain-based settlement systems without wading through regulatory uncertainty.
Even with this new flexibility, governance and risk management remain central. The ability to hold operational crypto does not alter long-standing expectations around safety and soundness, custody controls, vendor oversight, or AML/KYC requirements. Banks that pair technical experimentation with disciplined compliance frameworks will be best positioned to advance.
The guidance also reshapes how banks may evaluate vendor partnerships. Institutions exploring operational crypto will increasingly look for fintech partners that offer secure custody, manage gas-fee abstraction, support token-agnostic infrastructure, and deliver audit trails that meet supervisory expectations.
This shift may encourage a new wave of collaboration focused on core infrastructure for institutions rather than consumer-facing digital asset products.
What This Means For Fintechs
For fintech firms working in tokenization, settlement technology, compliance infrastructure, or on-chain/off-chain connectivity, the OCC’s interpretation represents a meaningful opening.
Regulatory uncertainty has long slowed bank adoption; the ability for institutions to hold operational crypto changes that conversation. Fintechs that can demonstrate clear operational efficiency—rather than emphasize speculative applications—may see stronger engagement from banks.
Success will require “bank-ready” architecture: detailed audit trails, token-handling practices aligned with supervisory expectations, clear separation between operational and speculative assets, and enterprise-grade risk and compliance capabilities. As banks begin piloting tokenized deposits, collateral flows or settlement processes, fintechs that can quantify improvements in speed, treasury efficiency, or operating cost will be well-positioned.
While the OCC’s interpretation does not answer every question in digital asset regulation, it removes one of the most practical obstacles to blockchain-based modernization. Banks do not need to take a market view on digital assets to test or operate emerging rails. They simply need the ability to use small amounts of crypto to make these systems function. The operational moment has arrived—and both banks and fintechs now have an opportunity to advance within a defined regulatory perimeter.
