Overview
On December 9, 2025, the Office of the Comptroller of the Currency (OCC) issued Interpretive Letter #1188 (IL 1188), in which it affirmed that national banks may engage in riskless principal transactions in crypto-assets.
A riskless-principal transaction is one in which an intermediary purchases an asset from one party for immediate resale to a second party, which is the ultimate purchaser. The two transactions offset each other (from the perspective of the intermediary), occur nearly simultaneously, and the intermediary's purchase is conditioned on an offsetting order from the ultimate purchaser.
I. Transactions in "Crypto-Asset Securities"
IL 1188 notes that riskless principal securities transactions are permissible under 12 U.S.C. § 24(Seventh).1 Because a riskless principal transaction in a crypto-asset security remains a riskless principal transaction in a security, IL 1188 reasons, national banks may engage in riskless principal transactions in crypto-asset securities.
II. Transactions in Non-Security Crypto-Assets
Under 12 U.S.C. § 24(Seventh) national banks may exercise "incidental powers as shall be necessary to carry on the business of banking." Twelve C.F.R. § 7.1000(c)(1) provides the factors considered when evaluating whether an activity is part of the business of banking: (i) it is the functional equivalent to, or a logical outgrowth of, a recognized banking activity; (ii) the activity strengthens the bank by benefiting its customers or business; (iii) the activity involves risks similar in nature to those assumed by banks; and (iv) the activity is authorized for state-chartered banks.
(i) Relation to Recognized Banking Activity
The OCC analogizes riskless principal transactions in crypto-assets to bank brokerage activities, i.e., buying or selling financial instruments as an agent for bank customers, or engaging in securities conduit lending in which a bank borrows securities from a customer in order to lend the securities to third parties. It also notes that buying and selling crypto-assets as a riskless principal for a custody customer is the economic equivalent to buying and selling them as an agent for a custody customer, and therefore riskless principal transactions are a logical outgrowth of custody services.
(ii) Benefit to Customers or Bank's Business
The OCC notes that applicants have discussed the benefits that offering riskless principal crypto-asset transactions would provide for the proposed banks' customers and business, citing the safety offered by transacting using a bank rather than another type of entity.
(iii) Nature of Risks Posed by Activity
The OCC observes that the risk posed by engaging in riskless principal transactions is low. Such risk emanates primarily from counterparty credit risk, i.e., the risk that the second leg of the transaction (in which the bank must sell the asset) falls through. The OCC notes that banks "would typically have in place procedures to sell the crypto-assets as soon as possible," thereby limiting the market risk of doing so.
(iii) Authorization for State-Chartered Banks
Finally, the OCC observes that no state regulatory frameworks expressly prohibit state banks from engaging in riskless principal crypto-asset transactions, and that in light of state banks' "clear authority" to engage in such transactions, "this factor does not weigh against determining that national banks may engage in riskless principal crypto-asset transactions."
Takeaways
IL 1188 represents another in a series of incremental steps toward integration of services related to digital assets—e.g., paying gas fees and holding crypto-assets as principal, providing crypto-asset custody services, and now engaging in riskless principal transactions—into the business of banking. Expansion of the business of banking in this way has been coupled with an increased openness from the OCC to new bank and trust bank charter applications from digital asset firms, which in turn have increased significantly this year. Steptoe's Financial Innovation and Regulation Practice Group is well-positioned to advise on ways banks and putative banks can capitalize on these developments and engage in digital asset activity in the U.S. market.
112 U.S.C. § 24(Seventh) ("The business of dealing in securities and stock by the association shall be limited to purchasing and selling such securities and stock without recourse, solely upon the order, and for the account of, customers, and in no case for its own account, and the association shall not underwrite any issue of securities or stock….")
