Crypto Assets in Banking

As institutions evaluate their role related to digital assets, they need to know what has changed, why it matters now, and what else they need to find out.

Over the past several months, a notable shift has taken place in the dialogue about financial institutions and their evolving role in the digital asset ecosystem. With a new presidential administration, a new Securities and Exchange Commission (SEC) chair, and federal banking regulators taking a more open stance on crypto assets, banks and credit unions are revisiting questions many shelved years ago: Should we be engaging with digital assets – and if so, how?

This renewed interest is more than just buzz. Regulatory developments are opening new doors, and institutions that once viewed crypto assets as out of bounds are now beginning to reevaluate. But with that opportunity comes potential risk. Here’s what’s changed, what’s developing, and questions leaders should be asking as they explore a potential entry into this space.

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What’s changed?

A key catalyst was the SEC’s decision to rescind Staff Accounting Bulletin (SAB) 121, an accounting interpretation that effectively discouraged banks from custodying crypto assets by requiring banks to recognize a safeguarding obligation – a treatment not applied to other custodied assets – which significantly impacted regulatory capital requirements. With SAB 121 now repealed, the playing field looks more familiar, as digital assets held in custody can once again be held off balance sheet, like other custodied assets.

In parallel, legislative and regulatory momentum continues to grow. Two significant bills – the Stablecoin Transparency and Accountability for a Better Ledger Economy Act of 2025 (STABLE Act) and the Guiding and Establishing National Innovation for U.S. Stablecoins of 2025 (GENIUS Act) – have advanced past committee in Congress. On May 19, the U.S. Senate moved closer to passing the first regulatory framework for stablecoins. The bipartisan vote saw 16 Democrats and 50 Republicans advancing the legislation. The final vote could occur late this week or slip into early June after the Memorial Day recess. These bills signal an intent to bring clarity and structure to stablecoin issuance and oversight. Similarly, banking regulators are rolling back guidance that dissuaded regulated institutions from getting involved with digital assets. For institutions exploring this space, the potential implications are meaningful as more regulatory clarity would lower barriers to entry, which in turn could lead to an increase in competitive pressures and the emergence of new revenue streams with, of course, new risks and complexities that should not be overlooked. 

What’s developing?

As institutions explore potential entry points into the crypto asset space, custody and execution services are among the most commonly evaluated.

Custody and trade execution activities

In May 2025, the Office of the Comptroller of the Currency (OCC) issued guidance reaffirming that OCC-supervised financial institutions may provide crypto asset custody and trade execution services, either directly or through third parties, subject to safe and sound banking practices. Key takeaways from this latest guidance include:

• Custody authority extends to crypto assets. Banks may provide crypto asset custody services in fiduciary or nonfiduciary capacities, including safekeeping, valuation, reporting, and settlement services.
• Execution at customer direction is permitted. Buying and selling crypto assets held in custody is allowed when directed by the customer and consistent with applicable law and customer agreements.
• Third-party outsourcing is authorized. Banks may engage subcustodians or outsource to crypto asset service providers, provided the banks apply appropriate third-party risk management practices (see OCC Bulletin 2023-17).
• Safety and soundness remain foundational. All services related to crypto assets must be conducted in a safe and sound manner, with appropriate internal controls and regulatory compliance.

Key questions for financial institutions

As institutions consider whether and how to engage with the digital asset ecosystem, asking and answering the right questions is a critical first step. Here are a few to get started:

• How does engaging in these activities align with the institution’s risk appetite?
  Does the bank’s risk appetite support the technological complexity, third-party reliance, and evolving regulatory scrutiny that accompany digital asset activities? What processes and controls are needed to mitigate new risks?
• What specific customer needs or service gaps is the institution aiming to address?
  For example, is the greatest value proposition for the institution’s customers facilitating low-cost, instant payments – particularly in business-to-business or cross-border contexts? Or is it providing custodial and execution services?
• Is the institution issuing a product or enabling access to someone else’s?
  The answer determines everything from accounting treatment to risk exposure.
• Is the right third-party risk management framework in place?
  Similar to the emphasis seen with fintech partnerships, institutions must assess vendor controls, technical reliability, compliance posture, and financial backing.
• Is the institution up to speed on current and expected regulatory and legislative developments?
  With legislation pending and regulatory changes happening frequently, what mechanisms are needed to stay up to date and confirm the institution is evaluating the latest developments?

The bottom line

Engaging in crypto asset activity doesn’t mean diving headfirst into the deep end – but ignoring the topic altogether might no longer be an option. Even if an institution ultimately chooses not to participate, the conversation needs to be happening. With the regulatory landscape shifting, the question is no longer if financial institutions will interact with digital assets – but how.

Whether an institution is exploring custody, payments, or partnerships, staying informed is the first step. And as the rules evolve, so too must the institution’s understanding of what it means to engage safely, soundly, and strategically. Crowe specialists stand ready to assist institutions through education and support in standing up a crypto asset program and determining the accounting and regulatory impacts.