The rapid growth of cryptocurrency has led to increased demand for secure custody solutions, particularly from institutional investors and businesses looking to protect digital assets. In response, national banks in the United States have entered the space, offering cryptocurrency custody services under regulatory guidance from the Office of the Comptroller of the Currency (OCC).
Custody services for cryptocurrency involve more than just storing digital assets—banks must also ensure compliance with financial regulations, implement risk management protocols, and maintain security standards. With the legal and regulatory landscape evolving, banks must take a structured approach to offering cryptocurrency services.
This article explores the responsibilities of national banks in providing cryptocurrency custody services, the regulatory requirements they must meet, and how legal oversight plays a role in maintaining security, transparency, and compliance in the crypto markets for 2025.

The Role of National Banks in Cryptocurrency Custody

Cryptocurrency custody refers to the storage and management of digital assets, ensuring they are kept secure from theft, loss, or unauthorized access. Traditionally, cryptocurrency custody has been dominated by specialized firms, but in recent years, banks have been authorized to offer these services.
The OCC officially recognized national banks' ability to provide custody services in OCC Interpretive Letter 1170, classifying crypto custody as a modern extension of traditional banking services. This means that banks must uphold the same fiduciary duties and risk management obligations as they do with traditional financial assets.
A cryptocurrency lawyer can help banks navigate complex compliance issues when integrating crypto custody services into their business models.

Compliance Framework for Cryptocurrency Custody

National banks must establish a legal and operational framework that aligns with both state and federal regulations. This includes:

Legal and Regulatory Compliance

• Banks must register their cryptocurrency custody services with the appropriate regulatory bodies.
• Fiduciary obligations require segregation of assets, meaning digital assets held in custody cannot be mixed with the bank's assets (§ 92a Trust Powers).
• State regulations may vary, requiring banks to coordinate with local authorities in addition to federal compliance.

Risk Management Protocols

• Banks must conduct detailed risk assessments before offering crypto custody services.
• A risk-based approach must be applied to cryptocurrency transactions to prevent money laundering, fraud, and cybersecurity threats.

Consultation with Regulators

• Banks are expected to consult with the OCC before launching cryptocurrency custody services.
• They must continuously monitor compliance and adjust their policies as cryptocurrency regulations evolve.
  A cryptocurrency lawyer free consultation can help banks and financial institutions develop compliance strategies tailored to the latest legal standards.

Security Measures for Cryptocurrency Custody

Given cryptocurrency's decentralized and digital nature, security is a top priority for national banks providing custody services. Banks must implement robust security protocols to prevent hacking, fraud, and internal mismanagement.

Cold Storage vs. Hot Wallets

• Cold Storage: Offline storage that protects digital assets from cyberattacks.
• Hot Wallets: Online wallets are used for quick access but require strict security measures.

Banks must maintain separate storage systems for different types of clients and ensure that custodial assets are never compromised.

Multi-Signature Authentication
Cryptocurrency transactions should be authenticated using multi-signature protocols, ensuring multiple approvals are required before executing transactions.

Smart Contract and Blockchain Security

• Banks that provide custody for smart contracts and tokenized assets must regularly audit blockchain security protocols.
• Smart contract vulnerabilities can expose banks to financial and legal risks, making legal oversight essential.

A cryptocurrency lawyer near me can assist in reviewing smart contract terms and ensuring that all legal protections are in place.

The Role of a Bank's Board and Management in Cryptocurrency Custody

National banks must ensure that their board of directors and executive teams are actively involved in the approval and oversight of cryptocurrency custody services.

Board Approval for Custody Services
Before launching cryptocurrency custody operations, a bank must:

• Conduct a legal review of its obligations.
• Evaluate the risks and technical requirements of crypto custody.
• Obtain formal approval from the board for implementing cryptocurrency services.

Ongoing Monitoring and Internal Audits
The bank must develop internal controls to track and audit cryptocurrency transactions.
Regular reports must be submitted to state and federal regulators regarding compliance and risk management.
By engaging with a cryptocurrency lawyer, banks can ensure regulatory compliance and reduce exposure to legal liabilities.

Fiduciary Responsibilities and Client Protections

Banks providing cryptocurrency custody services owe fiduciary duties to their clients, meaning they must:

• Protect digital assets from loss, fraud, and theft.
• Ensure accurate reporting and record-keeping for all transactions.
• Act in the best interest of their clients, preventing conflicts of interest.

A cryptocurrency custody agreement should clearly outline the following:

• The bank's responsibilities and limitations.
• The client's rights regarding asset access and withdrawal.
• Dispute resolution mechanisms in case of any conflicts.

Banks should work with a cryptocurrency lawyer for free consultation to draft legally sound custody agreements.

Future Outlook for Cryptocurrency Custody in Banking

As cryptocurrency adoption increases, national banks will continue to expand their involvement in crypto custody, trading, and lending services. However, regulatory scrutiny will also increase, requiring banks to:

• Stay updated with new federal and state laws.
• Invest in cutting-edge security infrastructure to protect assets.
• Collaborate with legal experts to navigate the evolving regulatory landscape.

The role of cryptocurrency lawyers in guiding banks through compliance, contract negotiations, and dispute resolution will become even more critical.

Final Thoughts
National banks play an essential role in cryptocurrency custody, but their responsibilities go far beyond asset storage. They must adhere to strict compliance frameworks, implement advanced security measures, and uphold fiduciary duties to protect clients' digital assets.
If you are a financial institution looking to expand into cryptocurrency custody, consulting a cryptocurrency lawyer near me can help you ensure full compliance with regulatory requirements.