The Game-Changer We’ve Been Waiting For

The Office of the Comptroller of the Currency (OCC) dropped a bombshell on March 7, 2025, with Interpretive Letter 1183. This isn’t some dry regulatory tweak—it’s a seismic shift that fundamentally reshapes how banks can engage with cryptocurrency. For years, the U.S. banking system has tiptoed around crypto, shackled by uncertainty and restrictive policies. Now, OCC 1183 dismantles these barriers, paving the way for banks to custody crypto assets, back stablecoins, and participate in blockchain networks without prior supervisory approval. For crypto-focused hedge funds and the entire crypto ecosystem, this signals a pivotal shift in institutional adoption and regulatory clarity, positioning the U.S. to lead in digital finance.

Banks Unleashed: Crypto Without the Red Tape

Here’s the core of it: OCC 1183 repeals the burdensome requirement from Interpretive Letter 1179 (2021), which forced banks to get a regulatory green light before touching crypto-related activities. No more supervisory non-objection letters for things like holding cryptographic keys, running stablecoin reserves, or joining blockchain networks. Now, activities like providing custody for digital assets or holding stablecoin reserves—first permitted under Letters 1170 and 1172—are treated as standard banking functions, subject to regular risk management and oversight.

The OCC’s Acting Comptroller, Rodney E. Hood, underscored this shift in the OCC Press Release, noting it “reduces burden, encourages responsible innovation, and ensures consistent treatment of bank activities, regardless of the underlying technology.”

This is a big deal—banks can now move confidently into the crypto space, amplifying liquidity and trust for our industry.

Stablecoins Get a VIP Pass to the Banking System from OCC 1183

The real sleeper hit here is what OCC 1183 does for stablecoins. By affirming banks’ ability to hold reserves for stablecoins on a 1:1 fiat basis without pre-approval, it offers a glimpse into a future where stablecoins aren’t just crypto’s quirky cousins—they’re fully integrated into the U.S. banking system. Stablecoins like USDC have always aimed to mirror fiat currencies in the digital realm, but their integration into traditional financial systems has been hindered by regulatory headaches and uncertainty. Now, with these regulatory barriers significantly reduced, banks can back them with the same safety and trust that props up the dollar itself.

Imagine a world where receiving stablecoins is as simple and familiar as getting money through Apple Pay or PayPal—the funds just appear in your bank account without friction. Sell stablecoins directly to your bank account—no clunky off-ramps, no third-party exchanges, just the same seamless experience consumers expect from modern payment apps.

Banks could issue their own stablecoins or partner with existing platforms, streamlining cross-border payments and settlements. This bridges crypto’s efficiency with banking’s trust, a fusion that could redefine financial infrastructure. For stablecoin operators, tying into the banking system means better compliance and a competitive edge—especially against offshore players who can’t match that level of regulatory integration and trust.

Breaking Free from Operation Chokepoint 2.0

To understand the significance of this move, we need to look back at what many in the industry dubbed “Operation Chokepoint 2.0”—a concerted push to limit banking access for crypto companies. This included a January 2023 joint statement from the Federal Reserve, FDIC, and OCC that highlighted crypto-asset risks to banking organizations, effectively discouraging financial institutions from serving the sector. Marc Andreessen captured the frustration during his November 2024 appearance on The Joe Rogan Experience (#2234), noting that dozens of crypto founders had been “debanked” under this regulatory regime. 

OCC 1183 reverses course completely. By removing special pre-approval requirements and withdrawing from that joint statement, it treats crypto activities like other banking functions—subject to standard risk management rather than exceptional scrutiny. This pivot from obstruction to enablement represents a win for innovation in the digital asset space.

As banks begin implementing these services, we’ll likely see stablecoins gain wider adoption, new financial products emerge, and the boundaries between traditional finance and crypto continue to blur. OCC Interpretive Letter 1183 isn’t just a regulatory update—it’s a pivotal moment in the evolution of digital assets in America. The U.S. banking system is finally catching up to crypto’s potential, and the industry now has a clearer path forward.

Disclosures: This article is for informational purposes only and should not be considered financial, legal, tax, or investment advice. It provides general information on cryptocurrency without accounting for individual circumstances. Sarson Funds, Inc. does not offer legal, tax, or accounting advice. Readers should consult qualified professionals before making any financial decisions. Cryptocurrency investments are volatile and carry significant risk, including potential loss of principal. Past performance is not indicative of future results. The views expressed are those of the author and do not necessarily reflect those of Sarson Funds, Inc. By using this information, you agree that Sarson Funds, Inc. is not liable for any losses or damages resulting from its use.