On November 23, the Office of the Comptroller of the Currency (OCC) published a letter confirming that banks must demonstrate that they have adequate controls in place before engaging in certain cryptocurrency, distributed ledger, and stablecoin activities.

This letter follows the release of the interagency statement on the crypto-asset policy sprint initiative and forms part of overall initiatives to provide clarity about crypto-assets and the federal banking system.

Interpretive Letter #1179 provides a roadmap for banks to engage with the supervisory offices. After notifying its supervisory office of an intent to engage in cryptocurrency, distributed ledger, and stablecoin activities, the bank will receive a written notification of the supervisory office's non-objection, before which the bank should not engage.

To obtain supervisory non-objection, a bank should demonstrate the establishment of an appropriate risk management and measurement process for the proposed activities, including having

• Adequate systems in place to identify, measure, monitor, and control the risks of its activities

• The ability to do so on an ongoing basis

• An understanding of compliance obligations related to the specific activities, including, requirements under federal securities laws, the Bank Secrecy Act, anti-money laundering, the Commodity Exchange Act, and consumer protection laws

Subsequently the supervisory office will evaluate the adequacy of a bank’s risk measurement and management information systems and controls to provide cryptocurrency, distributed ledger, and stablecoin activities on a safe and sound basis.