Introduction
In a significant development for the banking sector, an unnamed national bank has sought the approval of the Office of the Comptroller of the Currency (OCC) to incorporate cryptocurrency assets into its balance sheet for the purpose of facilitating blockchain-based services. On November 18, 2025, the OCC responded with Interpretive Letter 1186, which delineates the parameters for national banks regarding their ability to engage in activities involving cryptocurrency.
Key Provisions of Interpretive Letter 1186
Within this interpretive letter, the OCC explicitly affirms that national banks are permitted to hold native digital assets necessary for remitting blockchain “network fees,” commonly referred to as gas. This pivotal clarification effectively dismantles a substantial operational barrier that has previously hindered banks from engaging directly in on-chain transactions without resorting to external mechanisms.
Operational Implications
The OCC articulates that a national bank may allocate resources to cover blockchain network fees as an activity deemed “incidental to the business of banking.” Moreover, it may hold cryptocurrency assets as a principal for operational needs that are “reasonably foreseeable.” This singular clarification alleviates one of the most pressing challenges faced by financial institutions desiring to custody digital tokens or utilize stablecoins on public blockchain networks.
This ruling underscores the necessity for banks wishing to engage in token custody or stablecoin transactions on platforms such as Ethereum to maintain a requisite balance of Ethereum (ETH) or equivalent assets. Historically, many financial institutions have either eschewed on-chain activities or have relied on third-party service providers to manage gas fees, thereby introducing friction and inefficiencies into their operations. The OCC now provides a pathway for banks to internally manage these native tokens, thus streamlining their operational frameworks.
Integration with GENIUS Act Framework
The interpretive letter is intrinsically linked to the activities sanctioned under the GENIUS Act framework concerning stablecoins. The OCC stipulates that banks must fulfill network fee obligations either as agents for customers or as part of their custodial responsibilities. This linkage not only clarifies the operational landscape but also facilitates broader engagement with blockchain technologies.
The March-May 2025 Policy Shift
This letter builds upon the strategic pivot executed by the OCC between March and May 2025, during which previously stringent guidelines requiring prior approval for any cryptocurrency activity were rolled back. The OCC reaffirmed that banks could partake in crypto custody, certain stablecoin activities, and participation in distributed ledger networks without preemptive clearance, contingent upon adherence to established risk management protocols.
Letter 1186 zeroes in on a critical operational impediment within this new regulatory framework: effective on-chain custody or tokenized deposits necessitate permission to hold gas tokens. The OCC’s rationale posits that if serving as a node is permissible, then holding and accepting crypto asset network fees should logically follow suit; otherwise, financial institutions could face an unjustifiable barrier to lawful operation.
Transformations in Custody and Payment Mechanisms
The implications of this ruling extend significantly into payment processing and settlement systems. This development represents an evolution in operational capacity rather than a shift toward proprietary trading practices. The most pronounced benefits will accrue to banks operating stablecoin initiatives or tokenized deposit schemes settled on public blockchains.
Enhanced Operational Efficiency
These institutions now possess explicit authority to maintain gas reserves necessary for processing customer transactions autonomously, thereby eliminating reliance on external liquidity providers and intermediary structures. This change is particularly relevant for banks acting in custodial roles, especially concerning GENIUS-compliant stablecoins.
However, it is crucial to note that holdings of cryptocurrency must be confined strictly to “operational needs,” including maintaining buffers for transaction settlements and testing custody platforms. This delineation between custodial needs and speculative investment positions underscores the regulatory intent: while banks may hold sufficient ETH to facilitate transaction volumes and platform testing, they must refrain from engaging in speculative practices with these native tokens.
Remaining Constraints and Regulatory Considerations
The OCC emphasizes that all activities must occur within a framework deemed “safe and sound” while adhering strictly to existing regulatory statutes. The press release accompanying this guidance elucidates that financial institutions are required to limit their holdings of cryptocurrency, aligning them with specific permissible activities while implementing standard market, liquidity, operational, cyber risk management frameworks, and compliance with Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) regulations.
A notable point of contention arises from the divergent regulatory stances between the OCC and the Federal Reserve regarding state member banks’ ability to hold cryptocurrencies as principal assets—a designation the latter continues to classify as “unsafe and unsound.” This regulatory dichotomy engenders potential friction across jurisdictions, wherein OCC-chartered banks possess clearer pathways for utilizing operational gas balances compared to their state-chartered counterparts.
Strategic Implications for the Banking Sector
The broader significance of Interpretive Letter 1186 lies in its capacity to enable U.S. banks to engage more fully in on-chain finance without encountering regulatory hurdles or competitive disadvantages relative to crypto-native enterprises. For years, financial institutions faced implicit prohibitions against direct engagement with cryptocurrencies due to stringent off-chain mandates or cumbersome approval processes.
The March pivot initiated a pathway toward greater flexibility regarding custody and stablecoin operations; however, this latest letter effectively removes one final obstacle by permitting banks to hold gas tokens necessary for transaction settlement. Should this stance persist, one can anticipate national banks with existing tokenization initiatives or stablecoin programs transitioning towards internal gas management systems over the forthcoming year.
This transformation will not fundamentally alter the economic principles underpinning on-chain payments but will indeed consolidate core functions within regulated entities while diminishing reliance on fintech intermediaries for essential settlement operations. Furthermore, it establishes a precedent concerning how regulators may approach other operational necessities requiring native token holdings—ranging from staking mechanisms in proof-of-stake networks to liquidity provisioning within decentralized finance protocols that may eventually attract banking involvement.
A potential risk persists: if this position remains exclusive to OCC-regulated entities without parallel guidance from the Federal Reserve for state-chartered banks, a two-tier regulatory structure may emerge whereby charter selection dictates access to gas token holdings. Such an outcome could compel more financial institutions towards national charters specifically designed for crypto-related activities, concentrating operations under a singular regulatory authority while placing state-chartered banks at a competitive disadvantage within on-chain service offerings.
Conclusion
In summary, while Letter 1186 signifies an important progression toward regulatory clarity regarding cryptocurrency activities within national banks, it remains essential to recognize that this represents permission rather than comprehensive policy convergence. The disparity between permission granted and overarching policy coherence will ultimately delineate how extensively U.S. banks can leverage opportunities presented by blockchain technology moving forward.
