The US regulator has allowed banks to store cryptocurrency to pay fees on the blockchain

The U.S. Office of the Comptroller of the Currency (OCC) took a major step toward integrating cryptocurrency into the traditional banking system by publishing Interpretive Letter No. 1186. This document confirms that banks are permitted to hold small amounts of crypto assets to pay network fees (gas) on blockchains.

New Opportunities for Banks

According to the OCC's clarification, financial institutions are now permitted to hold limited amounts of cryptocurrency in their accounts for operations and testing. This decision opens new horizons for banks, allowing them to interact more effectively with distributed ledgers.

The regulator emphasizes that such actions are permissible only if all security and legal requirements are met. This means that banks must act cautiously and within established regulations.

OCC Position

The OCC document also notes that national banks may pay network fees on blockchains if necessary to perform permitted transactions. "Fees are a necessary element of interaction with distributed ledgers. Without them, transactions and smart contract execution are impossible," the letter states.

Banks can hold minimum amounts of native blockchain tokens on their balance sheets to pay fees. This applies to both ongoing operations and testing of platforms developed by the financial institution itself or obtained from third-party providers.

Why do banks need this?

Network fees in blockchains can vary depending on network load. In some cases, transactions are only possible if fees are paid in a native token, such as ETH on the Ethereum network. The OCC noted that without access to native assets, banks may face delays, additional costs, and technological risks.

Now banks can:

- Pay gas fees both on their own behalf and on behalf of a client.
- Act as an agent for custodial services.
- Maintain a small reserve of tokens for predictable operational needs.

Risks and Alternatives

The regulator also emphasized that third parties can provide similar services, but this may carry additional risks, including price volatility and operational delays. Thus, the OCC's new authorization opens new opportunities for banks, but requires them to carefully manage risks.

In Conclusion

The OCC's authorization to hold cryptocurrency for network fees is a significant step in the integration of crypto assets into the US banking system. This decision not only simplifies the process of banks interacting with blockchains but also opens new horizons for innovation in the financial sector.