OCC and FDIC Clarify Bank Supervision Standards to Benefit Crypto Firms

The US Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC) have clarified their definition of 'unsafe or unsound practices' in bank supervision.

The new rule requires supervisory concerns to be linked to material financial risk or legal and regulatory compliance issues, prioritizing substantive financial risks over nonfinancial matters such as policies, procedures, and documentation.

The OCC and FDIC issued a final rule on August 27 establishing a uniform definition of 'unsafe or unsound practices' and common supervisory standards for banks. The rule will take effect 60 days after it is published in the Federal Register.

The crypto industry has welcomed this move, saying it could reduce pressure on banks to restrict services to crypto firms. This development is also seen as a step towards reversing 'Operation Chokepoint 2.0', a term coined by the industry to describe what they claim is regulators' use of bank supervision to restrict access to financial services for crypto companies.