Unpacking the Rise in Crypto Banking Services and OCC Licenses

Not long ago, crypto banking looked messy by default. Regulations were fuzzy and unpredictably enforced. In this environment, risk teams were asked to stitch together compliance standards for a market that acted a bit like the Wild West.

But that's changing.

The Crypto Task Force spent 2025 holding stakeholder roundtables, with the intention of setting understandable regulatory standards that shepherd crypto into the modern world, while protecting investors from fraud, theft, and financial loss.

And recently, the Office of the Comptroller of the Currency (OCC) affirmed national banks may safeguard digital assets as part of their existing custodial authority, provided activities are conducted safely and securely.

In other words, regulators are opening the door to crypto banking services in the US.

Banks for cryptocurrency clientele are popping up across the US. But what exactly is a crypto bank? And what do institutional investors need to know about them? Let's find out.

Key takeaways

• Crypto banks operate under various licenses, jurisdictions, and risk frameworks.

• Leading institutional drivers of the formation of crypto banks include client demand, payment integration, treasury diversification, and established infrastructure.

• Institutions can pursue the path to regulated crypto services through OCC charters, state trust licenses, or bank partnerships.

• Crypto-native firms seek banking partners that reduce friction and understand digital asset risk.

• OCC approval strengthens regulatory clarity while supporting multiple crypto-banking models.

What is a crypto bank?

Crypto banks fall into three categories:

• Traditional banks offering crypto services: Established financial institutions that have expanded into digital assets. Services range from full, or limited, banking access for consumers as well as lending and asset custody.

• Crypto-native firms: A bank for cryptocurrency has been a long time coming, and recently, digital asset companies are pursuing licenses. Such firms are purpose-built for banking in cryptocurrency, and feature higher levels of familiarity with the market than traditional banks, allowing them to provide trading, asset storage, and liquidity support tailored to the unique requirements of cryptocurrency markets.

• Hybrid models: For instance, BitGo was recently awarded an OCC license to convert to a federally chartered national trust bank. We'll operate under the OCC's jurisdiction, allowing us to provide asset custody services to institutional providers with the regulatory certainty firms expect from all federally regulated fiduciaries.

The intersection of banks and crypto is relatively new, and the business models clients can expect aren't standardized. Not all organizations will operate under the same rules, jurisdictions, or with the same capabilities. We recommend vetting regulatory frameworks, operational controls, and capacity before choosing a trusted partner.

Why banks are getting involved with cryptocurrency

Interest in banks specialized in cryptocurrency is being driven by customer demand. Retail investors are more involved than ever, and financial institutions appreciate being able to transfer assets across borders without involving traditional financial intermediaries.

Asset managers also want portfolio exposure to digital assets, but need trusted channels to engage with. Banks can provide infrastructure, complete with robust compliance practices, which were previously unavailable in the crypto market.

Payment flows are another consideration. Institutions want to move seamlessly between fiat and digital assets, without relying on fragmented intermediaries. In this context, crypto banks are positioned to provide on and off ramps between blockchain networks and fiat finance.

Banks specializing in cryptocurrency feature infrastructure advantages as well. Their business is to invite institutions into the cryptocurrency market, and to do so, need strong balance sheets themselves, robust security practices, and compliance programs tailored to a unique regulatory landscape.

Finally, stablecoin settlement, treasury diversification, and global payment access represent new revenue streams that align with existing institutional objectives. Such services leverage core competencies in risk management and compliance, rather than reinventing them, allowing institutions to tap a growing market.

The path to regulated crypto custody and banking services

The regulatory landscape is evolving, and quickly.

Historically, caution was a focus, leading crypto regulations to be unclear and enforcement actions hard to predict. In contrast, currently, there is active work building a regulatory framework for the digital age.

For institutions, that means new paths to market are emerging.

Some organizations are pursuing national trust charters through the OCC, allowing them to offer crypto banking services, including qualified custody solutions, nationwide. In fact, BitGo was recently awarded a charter.

The path begins with defining roles and scope, including supported assets and custody models. Institutions then document governance and risk frameworks, align with supervisory expectations, and apply.

Other firms choose to operate as a state-chartered trust company. This path allows corporations to act as fiduciaries for clients, but unlike most banks, they do not accept deposits or make commercial loans. Rather, they focus on asset management services for trusts, common funds, and index funds.

Finally, federal and state bank partnerships can form to offer crypto custody and related services. They begin with clear role definitions between traditional banks and crypto banks, outline governance and third-party risk controls, and establish technical systems to integrate fiat and digital asset payment flows.

Offering regulated digital asset custody requires both technical capability and regulatory clearance. Banks and crypto firms wanting to expand their offerings need to establish legal authority, compliance programs, and operational controls that satisfy both regulators and clients alike.

What crypto-native companies want from banking

Crypto-native companies have long faced friction when interacting with legacy banks. Frozen accounts, rejected transfers, and excessive compliance reviews have been historical potential barriers to entry.

Crypto businesses need banking partners that understand how blockchain transactions work, how risk manifests in digital asset flows, and how to maintain server uptime, even during turbulent markets.

Most crypto-native businesses want crypto banks to offer tailored compliance processes, clear communication, and to quickly resolve issues. Some crypto-native companies also prioritize partners that integrate custody, settlement, and treasury management in a single framework.

At least one truth has emerged from the experiences of crypto-native companies partnering with banks: retrofitting legacy banking systems is rarely sufficient.

Purpose-built infrastructure, aligned with regulated custody models, is often better than retrofitting legacy processes. As the ecosystem matures, these are looking for partners that can support scale without sacrificing compliance and functionality.

Infrastructure considerations for crypto banking services

Supporting crypto bank services requires security solutions which layer well on top of traditional controls. This includes asset safeguards, enforcing governance rules, and insuring assets against theft or misuse.

Key considerations include:

• Cybersecurity: Cold vs hot wallets, multi-party computation, and role-based approvals balance institutional security concerns with operational efficiency.

• Know Your Customer and Anti Money Laundering: Crypto bank compliance means adhering to KYC and AML laws familiar to traditional financial institutions.

• Policy Enforcement Tools: Restricting unauthorized transfers, enforcing whitelists, and other governance frameworks are a must.

• Secure Signing Workflows: Multi-party authorization, for example, ensures no single individual can unilaterally move assets, reducing both internal and external risks. Such systems protect against phishing and other cybersecurity risks.

Digital asset infrastructure must reflect institutional expectations, not only consumer-grade convenience. While evaluating providers, assess whether regulated crypto custody is supported by transparent controls, clear audit trails, and verified by third-party audits leading to SOC certification.

OCC approval and the future of crypto-banking integration

OCC approval is new, but is already reshaping how digital asset services fit within the wider US banking system. By allowing national trust banks to offer custody for digital assets, the OCC illuminated an avenue for crypto-banking institutions to expand further into the digital asset ecosystem.

This development signals greater regulatory clarity, but does not imply uniformity. Some institutions will pursue OCC licenses, while others will rely on state charters or partnerships. Each approach carries trade-offs.

OCC-regulated entities and crypto banks operate under strict supervision. This level of oversight introduces formal examination cycles, the necessity of improved documentation practices, and clear supervisory expectations; not all business models will require or benefit from this structure.

For some, parallel regulatory frameworks offer greater flexibility. Crypto exchanges, fintech platforms, payment providers, and Web3 infrastructure companies may prefer state-chartered trust models or bank partnerships, while others may favor the OCC pathway.

Crypto banks are here (but they won't all look the same)

Some crypto banks will be extensions of traditional banking institutions. Others will be purpose-built to serve the cryptocurrency market. The label encompasses a wide range of institutions, offering anything from limited services for retail investors to more complex solutions tailored to institutional investors.

Household names are already integrating crypto banking services into their offerings, but the landscape has not yet consolidated under a single model.

For institutional clients, the takeaway is this: evaluate partners based on regulatory expertise, governance processes, and infrastructure quality. Labels alone, and even a government license, do not guarantee a provider is suited to serve your needs.

BitGo's speciality is regulated custody solutions and digital asset infrastructure for institutional investors. We're positioned well to grow as the cryptocurrency, and wider banking industry, continues to evolve. If you're exploring custody providers, consider adding BitGo to your shortlist of potential partners.

FAQs

What's the difference between a crypto bank and a traditional bank that offers crypto services?

Not all crypto banks provide the same services, nor do they operate under the same rules or jurisdictions. But in general, a crypto bank is designed specifically for digital asset custody and governance, whereas traditional banks often offer only limited crypto services without full custodial authority. 

Are crypto banks FDIC-insured or regulated the same way as traditional banks?

No. Some crypto banks operate as trust companies or national trust banks. They are regulated, but not FDIC insured. 

How do crypto banks handle compliance with anti-money laundering regulations?

Crypto banks implement KYC and AML programs tailored to blockchain transactions. These systems monitor activity, flag risks, and produce audit trails in compliance with prevailing AML regulations.

What happens to my digital assets if a crypto bank fails or loses its license?

Client assets held in qualified custody, at least by BitGo, are segregated from our own assets. In this case, if something happens to your crypto bank, your assets will be handled separately from the bank’s assets during bankruptcy proceedings. Recovery options depend on your provider, but many custodians (including ourselves) insure assets against theft or loss.

Can crypto banks facilitate both fiat and digital asset transactions in a single account?

Typically, yes. Some institutions integrate fiat and digital asset workflows, while others don’t, but capabilities will vary by provider.