Regulatory agencies urged to provide clarity on cryptocurrency banking regulations, according to Coinbase.
The Financial Deposit Insurance Corporation (FDIC), along with the Federal Reserve and the Office of the Comptroller of the Currency (OCC), has issued joint Guidance clarifying regulatory expectations for banks holding crypto-assets for customers. This Guidance, issued on July 14, 2025, reiterates that banks may hold crypto-assets in both fiduciary and nonfiduciary capacities and that crypto safekeeping is governed under existing laws and risk management principles similar to those applied to other custodial assets.
The joint Guidance emphasizes that banks should apply high standards of care, such as maintaining exclusive control over cryptographic keys and conducting thorough due diligence of third-party custodians. It also outlines how banks should consider core financial risks, understand the crypto asset class, maintain strong controls, and have contingency plans before providing safekeeping services.
This move marks a significant shift in the regulatory approach towards cryptocurrency custody and execution services for banks, following the FDIC's review. The approach treats crypto custody within the same legal framework as traditional custody, requiring banks acting as fiduciaries to comply with fiduciary standards under 12 CFR parts 9 or 150 and applicable laws.
In parallel, new legislation is advancing that may further influence the regulatory environment for digital assets, including stablecoins and digital asset market infrastructure. Bills passed recently in the House include the Digital Asset Market Clarity Act of 2025 (CLARITY Act), which may provide additional regulatory clarity. Discussions in the Senate are ongoing to develop crypto market structure legislation by late 2025.
Coinbase, a leading crypto firm, has renewed calls for federal banking regulators to remove impediments limiting banks' abilities to offer cryptocurrency custody and execution services. Coinbase Chief Policy Officer Faryar Shirzad wrote a letter to the OCC, the Federal Reserve, and the FDIC, requesting that regulators confirm that banks are permitted to offer crypto custody and execution services either directly or through third parties, and that they remove roadblocks to crypto companies looking to partner with banks.
The FDIC is also reevaluating its supervisory approach to crypto-related activities and working on replacing its Financial Institution Letter, which warned about crypto-related activities. The FDIC will engage with the President's Working Group on Digital Asset Markets and has released 175 documents linked to its supervision of banks that engaged in, or wanted to engage in, crypto-related activities.
The FDIC's approach to cryptocurrency regulation appears to be more amenable compared to its predecessor, as President Donald Trump has been a vocal proponent of digital assets in the last year. Trump launched his own memecoin before starting his second presidential term and spoke at the Bitcoin 2024 conference in Nashville, Tennessee. Trump's administration has released 25 documents related to its supervision of institutions interested in pursuing crypto activities, following a review ordered by Acting Chair Travis Hill.
The FDIC's documents, including the "pause" letters it sent to institutions, emerge from its legal battle with Coinbase, which donated $1 million to President Donald Trump's inauguration campaign. Acting Chair Travis Hill has been critical of the FDIC's past approach on crypto and has ordered a comprehensive review of such communications.
In summary, regulatory authorities, including the FDIC, are evolving their supervisory framework to integrate cryptocurrency custody and execution services into existing banking laws with clarified expectations—focusing on risk management and operational standards—while not fundamentally altering supervisory authorities at this time. Legislative developments may also shape future regulatory approaches.
- Technology plays a crucial role in the evolving regulatory approach toward cryptocurrency custody and execution services, as banks are expected to maintain exclusive control over cryptographic keys and conduct thorough due diligence of third-party custodians, applying similar risk management principles as those used for other custodial assets.
- The regulatory landscape for digital assets, including stablecoins and digital asset market infrastructure, is evolving, with new legislation, such as the Digital Asset Market Clarity Act of 2025 (CLARITY Act), potentially providing additional regulatory clarity for banks offering cryptocurrency services, while discussions in the Senate are ongoing to develop crypto market structure legislation by late 2025.
