OCC Urges ‘Caution’ for FIs Offering Crypto-Related Financial Services


Caveat emptor, goes the Latin warning.

The translation: Buyer beware.

Cryptos may be luring the masses, but the Office of the Comptroller of the Currency (OCC) is sounding the alarm over the digital holdings.

The latest edition of the regulator’s Semiannual Risk Perspective report, this time for the Fall of 2021, stated that “distributed ledger technology and digital assets, including stablecoins and other crypto assets, may broaden delivery channels and the functionality of financial services.”

Indeed, many initiatives are moving to broaden FIs’ digital presence.

Examples of areas of continuing innovation, the OCC said, include faster and real-time payment products, increased use of mobile and digital technologies to deliver financial services, application programming interfaces, data aggregation services, and contactless payment devices.

The OCC noted that the banking industry “experienced a great deal of change over the last two years in response to the pandemic.” Against that backdrop, bank-wide change management processes were truncated in order to quickly respond to customer and organizational changes and needs, including the adoption of new technology.

The speed of the pivot might give rise to at least some hesitancy within nascent industries such as cryptocurrencies.

Approach With Caution 

“The OCC is approaching crypto-related activities in the federal banking system very carefully, with a high degree of caution, and expects its supervised institutions to do the same,” the agency wrote in its report.

Thus, if the FIs are going to be urged to be cautious, we might assume, too, that the individuals and institutions they serve are going to be urged to be cautious as well.

The OCC report comes not all that long after PYMNTS’ own research found that FIs that do not currently offer cryptocurrency access have what we might assume would be “limited” interest in doing so.

Just 4% answered “yes” to having plans to give their customers the ability to use cryptocurrency in the next 12 months, while 76% say “maybe” and 20% state that they definitely will not, according to “Cryptocurrency, Blockchain and Cross-Border Payments,” a PYMNTS and Circle collaboration.

Those assessments were based on extensive surveys of executives at 250 multinational businesses and 250 financial institutions.

As to the most prevalent headwinds: FIs also show little consensus about which challenges they believe stand in the way of their innovation strategy of offering cryptocurrency and blockchain products.

Just 31% identified the most frequently cited barrier — that the profitability of these products is not clear — as a problem, with concerns about data security (29%) as the runner-up. Approximately one-quarter of respondents identified seven of the eight remaining obstacles specified in our survey.

Read here: 73% of FIs That Offer Cryptocurrency Plan to Add More

So: The caution is already there. The OCC’s report might throw some water on what are only, relatively, embers, and not the roaring flames of strategic intent.

In the meantime, the report also cites the fact that other bodies are looking, actively, into cryptocurrencies. The President’s Working Group on Financial Markets report “identified key gaps in prudential authority” over stablecoins used for payments purposes.

“Additional clarity…is yet to come,” said the OCC.

Stay, as they say, tuned.