- OCC approves banks for riskless principal crypto-asset transactions.
- Ripple National Trust Bank’s application may be impacted by the new OCC decision.
- Banks must comply with safety standards and applicable laws in crypto trading.
On December 9, the Office of the Comptroller of the Currency (OCC) confirmed that national banks may now engage in low-risk crypto-asset transactions.
This decision responds to requests from recent applicants seeking clarification on whether such activities fall within the scope of banking services. Adam Cohen, Chief Counsel at the OCC, signed the letter in response to a request from Stephen Lybarger, Senior Deputy Comptroller for Chartering, Organization, and Structure.
The Content of the Letter
Under this approval, banks can act as middlemen in crypto transactions, helping customers trade crypto without actually holding it themselves. This setup is called a riskless principal transaction, similar to how brokers operate: they facilitate trades without owning the assets.
In practice, a bank buys crypto from one customer and immediately sells it to another, never keeping the crypto in its inventory. This reduces risks like market fluctuations and limits the bank’s credit and settlement exposure.
The decision is important because it clarifies that banks can handle crypto transactions even if the assets aren’t classified as securities, as long as certain rules are followed.
For crypto treated as securities, banks rely on existing legal authority under 12 U.S.C. § 24(Seventh). For non-securities crypto, the OCC sees these transactions as an extension of normal banking activities, like custody or financial intermediation.
The OCC stressed that banks must conduct these transactions safely and follow all laws and regulations, just as they do with other banking services.
Ripple National Trust Bank’s Potential Advantage
Ripple Labs, the parent company of Ripple National Trust Bank (RNTB), will closely monitor these developments. The bank is seeking approval from the OCC to operate as a national trust bank. It aims to provide fiduciary services and manage the reserves of Ripple USD (RLUSD), a stablecoin developed by Ripple.
Related: Ripple’s RLUSD Surges Past $1 Billion Market Cap With Multi-Chain Strategy Driving Growth
Ripple’s proposal will see RNTB integrate blockchain technology into traditional financial services. The bank’s application is under review, and approval could come by the end of the month, giving Ripple a regulatory framework to expand its digital asset operations in the U.S.
With the OCC now allowing banks to conduct riskless principal crypto transactions, RNTB could more easily manage crypto reserves and offer blockchain-based financial services. Approval of the charter would be a major milestone for Ripple and the broader digital asset industry.
Industry Pushback
In July, major banks, led by the American Bankers Association, asked the OCC to pause applications from crypto firms like Circle and Ripple for federal bank charters.
They argue that approving these charters would violate existing federal rules. Specifically, they cited unclear laws, limited public oversight, and doubts about whether crypto firms meet the trust and fiduciary standards required of national banks.
Related: Banks Say No to Ripple, but a Rare Fed Clause Could Force a Yes
Critics also note that core crypto services, like holding customer crypto, don’t count as traditional fiduciary activities. They warn that approving charters without public review could bypass long-standing rules and weaken protections in the U.S. financial system.
What This Means for Ripple’s Application
The OCC’s letter now provides clarity on crypto-asset transactions for banks. The guidance permits banks to conduct riskless principal crypto transactions, offering legal certainty.
For Ripple and its National Trust Bank application, the timing is significant. It suggests that the regulatory environment for crypto banking is becoming more structured, potentially accelerating approval for Ripple’s charter.
Related: Wall Street’s $500M Ripple Deal Had Baked in Profit Guarantees on XRP Risk – Bloomberg
As such, Ripple Labs may have a favorable environment to finalize its charter approval by the end of this month. This would bolster Ripple’s presence in the U.S. market and also set a precedent for other companies seeking such approval.
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