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Written by: 0xjs
Interpretive Letter 1188 (Interpretive Letter 1188) issued by the U.S. Office of the Comptroller of the Currency (OCC) on December 9, 2025 confirmed that national banks can participate in crypto asset transactions as “riskless principal” intermediaries.
The U.S. Office of the Comptroller of the Currency (OCC) issued Interpretative Letter 1188, confirming that national banks can engage in risk-free principal transactions in crypto-assets as part of their banking operations.Such transactions involve a bank acting as principal in a crypto-asset transaction with one client while simultaneously conducting hedging transactions with another client.Banks, as intermediaries, do not hold crypto-assets but act in a capacity similar to broker-agents.
This means that banks can purchase cryptoassets from one customer and immediately resell them to another customer without holding inventory or taking on market risk, limited to settlement risk.This model is similar to brokerage activities in traditional securities or foreign exchange markets and is considered a legitimate part of “banking”.
The decision marks a further step for U.S. regulators to embrace the integration of crypto assets, rather than suppress it.
Overall, this is a positive sign that will help drive institutional-level adoption, but it also presents some potential challenges.
Main positive impact
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Improve institutional liquidity and market depth: Banks can directly provide crypto trading intermediary services to customers, similar to the role of Coinbase or Binance, but in a regulated manner.This will inject more institutional funds, narrow bid-ask spreads, and increase market liquidity, especially for mainstream assets such as BTC, ETH, and stablecoins.It is expected that in the first quarter of 2026, many banks will launch encryption trading platforms to further attract large investors such as pension funds and corporate treasury.
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Accelerating the integration of mainstream finance and crypto: This provides banks (such as JPMorgan, Bank of America) with a federal-level “safe harbor”, allowing them to process customer orders without the need for third-party exchanges.In the past, banks relied on platforms like Paxos or Coinbase Prime; now, they can build proprietary trading desks to move crypto from the “speculative fringe” to “core financial services.”This may stimulate an increase in the allocation ratio of crypto assets in wealth management (some banks have currently recommended 1-4%).
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Enhanced regulatory clarity and compliance attractiveness: The OCC’s approval emphasizes that banks must comply with BSA/AML (anti-money laundering) and risk management requirements, which lowers the entry barrier for institutions.At the same time, it supplements the November 2025 OCC letter #1186 (allowing banks to hold limited crypto assets to pay network fees) to form a complete framework.Industry analysts believe that this will attract more compliant capital inflows and reduce the drag of “regulatory uncertainty” on the market.
Potential challenges and negative impacts
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Centralization and censorship risks: Bank dominance of transaction flows could exacerbate the centralization of the crypto industry, making it susceptible to government intervention or asset freezes (e.g. targeting specific addresses).This is contrary to the decentralized spirit of DeFi, may weaken the competitiveness of small exchanges, and trigger community concerns about a “Wall Street takeover.”
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Implementation barriers: Despite federal approval, state banks still require local licensing (like New York DFAL), and the OCC requires strict security reviews.In the short term, retail users may not benefit immediately, but are more institutionally oriented.Price fluctuations or settlement failures may still temporarily expose banks to market risk.
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Increasing competition: The entry of traditional banks will squeeze the market share of existing crypto exchanges, and platforms such as Coinbase need to strengthen compliance to compete.But it may also push the entire industry to mature and raise overall standards.
Market reaction and outlook
Discussions on the X platform show that the crypto community generally views it as a “game changer”, emphasizing its driving force for institutional adoption.
Bitcoin and Ethereum prices edged higher after the release, reflecting market optimism.
In the long term, this may mark the “Year of Crypto Banking” in 2025. It is expected that by the end of 2026, bank intermediary transaction volume will account for 10-20% of the crypto market.
All in all, this decision strengthens the status of crypto as a legitimate asset class and promotes the transition from fringe to mainstream, but needs to be wary of centralization risks.Investors should pay attention to subsequent bank product launches and legislative developments to assess the actual impact.
