U.S. federal regulators propose strict requirements on oversight and anti-money laundering
Banks must strengthen technical capabilities and internal controls; third-party custody responsibility also addressed
Growing expectations for accelerated institutional integration of the crypto market

U.S. federal regulatory agencies have issued new guidelines on cryptocurrency custody services provided by banks. These new guidelines target banks that are currently holding or considering holding crypto assets on behalf of customers. Industry experts interpret this as an end to the reputational risk factors imposed by the previous administration, which had discouraged banks from engaging in crypto custody. The announcement is seen as a significant step toward establishing an institutional foundation for U.S. banks to enter the custody market in earnest.

Banks Must Meet Strict Criteria Before Providing Crypto Custody

According to crypto-focused media outlet CoinDesk and other foreign sources on the 14th (local time), the Federal Reserve (Fed), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) jointly issued a statement that clarifies key compliance, supervision, and Anti-Money Laundering (AML) requirements, presenting standards banks must meet when offering digital asset custody services. The guidelines emphasize the need to comply with existing regulatory and risk management practices, focusing particularly on “safekeeping” crypto assets on behalf of customers.

According to the statement, banks can provide crypto custody services as trustworthy custodians with legal obligations. Alternatively, they may provide such services through secure storage providers without custody responsibilities, depending on contractual and regulatory arrangements. Regulators clarified that if a bank holds cryptographic keys, it assumes full control and responsibility. Banks must ensure no one else, including the customer, can access the keys—this is the standard for what regulators call “True Control.” Key identified risks include loss of cryptographic keys, cybersecurity breaches, market volatility, and AML compliance requirements.

Banks are also required to establish robust internal controls and stay continuously informed of developments in the crypto custody industry. Before launching custody services, they must assess their technical readiness and regulatory compliance status, and ensure they have a strong operational framework, crypto-specialized personnel, and up-to-date technology.

The statement further stipulates that banks must comply with AML, Countering the Financing of Terrorism (CFT), and Office of Foreign Assets Control (OFAC) regulations. Accordingly, banks must verify customer identities and continuously monitor for suspicious activity. Since blockchain-based environments often lack transparent identity information, meeting regulatory requirements can be especially challenging. Authorities also require banks to operate dedicated audit programs. These audits should cover safekeeping operations, key management, and personnel qualifications. If internal expertise is lacking, banks may hire third-party auditors.

Regulatory Approval for U.S. Commercial Banks’ Crypto Businesses

This guideline follows the U.S. government's earlier approval for commercial banks to enter the crypto business. In May, the OCC officially announced that U.S. banks could hold, buy, sell, or outsource crypto-related services at customer request. This provided a clear legal basis for banks to offer digital asset services.

As a result, national and federal savings banks in the U.S. can now buy/sell crypto assets and provide custody services based on client instructions. Related services such as trade execution, settlement, recordkeeping, valuation, and tax reporting are also permitted. The OCC acknowledged crypto custody as a modern extension of traditional bank custodial services and reaffirmed previous guidance.

Additionally, the OCC emphasized that when trust-based custodial services are offered, banks must comply with federal trust regulations (either Section 9 or 150) depending on their charter type. All crypto-related services must be performed in a safe, sound, and lawful manner, with the same standards applied to outsourced services. Legal ambiguity around whether banks could execute trades directly while holding customer assets has now been resolved.

The FDIC also announced that banks under its jurisdiction may enter the crypto business without prior approval. This enables over 5,000 U.S. banks to participate in digital asset-related ventures. In its Financial Institution Letter (FIL)-7-2025, the FDIC rescinded the prior pre-approval requirement, stating that banks may engage in crypto businesses if they maintain adequate risk controls. “Supervised institutions may engage in permissible activities involving crypto and digital assets and related technologies,” said the FDIC, “provided they are capable of managing the associated risks.”

This represents a reversal of the FDIC’s conservative stance since 2022. The agency has stated on its website that it directly supervises over 5,000 banks and savings institutions. FDIC Acting Chairman Travis Hill called the move “a turning point from the flawed approach of the past three years,” adding that the FDIC will continue to propose ways for banks to engage in crypto and blockchain activities while meeting safety and soundness standards.

Deutsche Bank to Launch Crypto Custody Services Next Year

Under the Biden administration, U.S. regulators had issued guidance that limited cooperation between banks and crypto firms. However, those restrictions have eased under President Donald Trump’s leadership. As a result, banks are now rushing to roll out crypto custody services—Deutsche Bank is a leading example.

Deutsche Bank plans to launch crypto custody services—including for Bitcoin—in 2026. The service is being developed in collaboration with the technical arm of Bitpanda, a crypto exchange based in Austria. It is also reported that Swiss fintech firm Taurus, supported by Deutsche Bank, will participate in the project. Deutsche Bank has been exploring entry into the crypto market since 2020, and the initiative is part of its strategy to expand its influence in the digital asset custody space.

In recent years, Deutsche Bank has shown increasing interest in crypto markets. Its Head of Digital Assets, Sabih Behzad, recently mentioned the possibility of entering the stablecoin market, saying the bank is evaluating issuing its own stablecoin or participating in related projects.

The bank is also reportedly assessing whether to develop tokenized deposit solutions for payments. At the end of last year, Deutsche Bank was said to be developing an Ethereum-based Layer 2 blockchain, using ZKsync technology. In 2023, the bank announced plans to offer crypto custody options in partnership with Taurus and applied for a digital asset custody license in Germany. In addition, as of June 2024, it has begun working with Bitpanda to improve crypto payment infrastructure.