On December 9th, 2025, the Office of the Comptroller of the Currency (“OCC”) issued Interpretive Letter #1188 (the “Interpretive Letter”) which confirms that national banks may engage in riskless principal crypto-asset transactions with and on behalf of their customers.
The Interpretive Letter indicates that “[i]n a riskless principal transaction, an intermediary purchases an asset from one counterparty for immediate resale to a second counterparty” who is the ultimate purchaser of the asset. In these transactions, the intermediary is the national bank, and its “purchase from the initial counterparty is conditioned on an offsetting order from a second counterparty to purchase the same asset from the [national bank].” The offsetting purchase and sale effectively occur simultaneously and the national bank would not actually hold the asset.
The OCC indicates that in these transactions the intermediary (i.e., the national bank) conducts itself as the legal and economic equivalent of a broker acting as agent. These transactions are considered “riskless” because the intermediary does not enter into the transaction without also having entered into an immediate offsetting transaction. However, this doesn’t mean that there is absolutely no risk.
For crypto-asset securities transactions, the Interpretive Letter quickly articulates that such transactions are permissible for national banks under 12 U.S.C. §24(Seventh) as part of the business of dealing in securities by purchasing and selling securities without recourse and on the order of a customer.
The OCC then turns to examine the authority for national banks to engage in riskless principal transactions in crypto-assets that are not securities. The analysis again considers the authorities granted to national banks under 12 U.S.C. §24(Seventh) and the incidental powers “necessary to carry on the business of banking,” which is left undefined by the statute. However, OCC regulations at 12 C.F.R. §7.1000(c)(1) consider the following factors to determine whether an activity is part of the business of banking:
(i) Whether the activity is the functional equivalent to, or a logical outgrowth of, a recognized banking activity;
(ii) Whether the activity strengthens the bank by benefiting its customers or its business;
(iii) Whether the activity involves risks similar in nature to those already assumed by banks; and
(iv) Whether the activity is authorized for State-chartered banks.
On these riskless principal transactions in crypto-assets that are not securities, the OCC quickly confirms that the first three factors above “weigh strongly in favor of determining that [such transactions] are part of the business of banking.” Finally on the fourth factor above, the OCC states that “[s]tate banks have long engaged in riskless principal transactions with respect to securities, and state regulatory frameworks concerning crypto-asset activities conducted by state banks are continuing to develop” and that “[i]n light of developing state regulatory frameworks with respect to crypto-asset activities, and states banks’ clear authority to engage in riskless principal securities transactions, this factor does not weigh against determining that national banks may engage in riskless principal crypto-asset transactions.”
So, what are the key takeaways?
- Current OCC leadership remains focused on allowing national banks to engage in crypto-related activities and welcomes new applications to do so.
- While these transactions are labeled as “riskless principal” transactions, they are not completely risk-free. The OCC itself indicates that (i) there is still counterparty credit risk, as in a non-crypto riskless principal transaction, and (ii) there may also be operational risk presented with these crypto-asset transactions because of the use of new technologies.
- Regardless of whether a bank is offering crypto-related products or services, these developments are critical to follow. Elements of the traditional financial architecture are changing and it will have implications across the board.