Blockchain Law Update: OCC, SEC, And States Advance Digital Asset Regulations
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The regulatory environment for digital assets in the United States is undergoing a significant evolution. Over the past month, several federal agencies—the Office of the Comptroller of the Currency, the Federal Reserve, the Financial Crimes Enforcement Network, and the Securities and Exchange Commission—have issued new guidance or policy updates that collectively reshape how banks and financial institutions may engage with crypto assets. These developments signal both a maturing of regulatory oversight and a growing institutional acceptance of digital assets within traditional financial frameworks.
On May 7, the OCC issued Interpretive Letter 1184, reaffirming that national banks and federal savings associations are authorized to provide crypto asset custody services. This letter builds upon earlier guidance and offers expanded clarity around what services are permissible and how they should be supervised. The OCC emphasized that crypto custody is essentially a modern extension of traditional bank custody services, provided it is executed with appropriate risk controls and in full regulatory compliance.
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Banks may offer services such as crypto-fiat currency exchange, trade execution, transaction settlement, recordkeeping, tax reporting, and valuation. They are also allowed to outsource these activities to third-party providers or sub-custodians, provided robust third-party risk management practices are in place. The letter also reinforces that when banks act in a fiduciary capacity, they must comply with the applicable regulations under 12 Code of Federal Regulations part 9, for national banks, or part 150, for federal savings associations. In essence, the OCC is reinforcing the idea that crypto-related services can be a natural part of a bank's offerings—as long as they are well-managed and fully compliant.
In a significant policy reversal, the Federal Reserve announced on April 24 that it has rescinded multiple supervisory letters and joint statements related to crypto activities. Most notably, it withdrew its 2022 directive that required state member banks to notify regulators in advance before participating in crypto asset-related activities. Going forward, these activities will now be reviewed through the standard supervisory process that applies to all other permissible bank operations.
The Fed also rescinded its 2023 guidance concerning the supervisory non-objection process for dollar token activities. These changes bring the Fed's position into closer alignment with the OCC and Federal Deposit Insurance Corp., which have also clarified that banks no longer need to seek explicit permission for engaging in crypto activities. This shift reflects a broader regulatory consensus: crypto-related services can be integrated into the banking system under the same risk-based oversight applied to other financial activities.
Trending: New to crypto? on Coinbase.
While regulatory clarity is improving for compliant institutions, enforcement against bad actors remains a priority. On May 1, FinCEN identified Cambodia-based Huione Group as a financial institution of 'primary money laundering concern' under the Patriot Act. The agency issued a notice of proposed rulemaking to sever Huione's access to the U.S. financial system.
According to FinCEN, Huione is implicated in laundering more than $373 million in crypto tied to cybercrime operations run by North Korea and transnational criminal organizations in Southeast Asia. These activities include running 'pig butchering' scams—fraudulent investment schemes targeting victims globally using cryptocurrency. The action underscores the U.S. government's ongoing efforts to combat illicit finance in the digital asset ecosystem, especially where nation-state actors and cybercrime intersect.
In a separate development, SEC Commissioner Hester Peirce issued a statement on May 15, supporting new FAQs from the Division of Trading and Markets. The FAQs provide clarification on how existing broker-dealer rules apply to crypto assets and distributed ledger technologies. While much of the content reaffirms existing regulatory expectations, the document is a step toward offering more transparency to firms operating in the crypto space.
The FAQs address several nuanced topics, including the treatment of in-kind creations and redemptions for spot crypto exchange-traded products, the net capital treatment of proprietary positions in bitcoin and ether, and the applicability of existing custody and transfer agent rules. Notably, the SEC confirmed that non-security crypto assets are not protected under the Securities Investor Protection Act of 1970. Peirce emphasized the importance of continued dialogue between regulators and market participants and described the release as a constructive, albeit incremental, effort toward clearer regulation.Taken together, these actions suggest a broader shift in how U.S. financial regulators are approaching crypto: moving from a siloed, case-by-case framework to a more integrated, principles-based supervisory model. Banks now have a clearer green light to explore crypto asset custody and execution services, provided they incorporate strong governance, risk management, and compliance programs.
At the same time, agencies like FinCEN remain aggressive in identifying and cutting off illicit actors from accessing the U.S. financial system. This dual-track approach—encouraging responsible innovation while increasing scrutiny of criminal use—will likely define the regulatory tone for digital assets over the coming years.
For banks and custodians: The OCC's updated guidance provides an opportunity to expand digital asset offerings. Institutions should evaluate their readiness to implement or scale crypto custody operations, especially with respect to third-party relationships and fiduciary responsibilities.
For asset managers: As the SEC continues to refine its treatment of crypto ETPs and custody rules, early movers may gain a competitive edge in launching regulated products.
For compliance and legal teams: The Huione designation and SEC FAQs highlight the need for strong AML protocols and legal clarity when dealing with tokenized assets or crypto custody services.
For fintech and infrastructure providers: Regulatory harmonization may create a more predictable environment for building and offering institutional-grade crypto services—but the bar for compliance is rising.
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This article Blockchain Law Update: OCC, SEC, And States Advance Digital Asset Regulations originally appeared on Benzinga.com
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