The U.S. Office of the Comptroller of the Currency (OCC) has issued Interpretive Letter 1188, formally confirming that national banks can broker crypto transactions for their customers using a structure known as riskless principal trading.

In its announcement and follow‑up coverage, the OCC explains that national banks may:

Buy a crypto asset from one counterparty.
Immediately resell the same asset to a client at the same price (plus any explicitly agreed fee or spread).
Avoid holding any ongoing crypto inventory on their own balance sheets, except for brief settlement purposes.

The activities are framed as part of the traditional “business of banking”, analogous to how banks already broker securities and foreign‑exchange trades for clients.

Practically, this means banks can facilitate client trades in major crypto assets such as Bitcoin, Ethereum, XRP and Solana directly, rather than steering customers toward offshore exchanges or third‑party brokerages.

How “riskless principal” crypto trades work

Riskless principal trading is a well‑established model in traditional finance. By applying it to crypto, the OCC is effectively saying: banks can match buyers and sellers in digital assets the same way they do in bonds or FX.

A typical flow looks like this:

A bank receives a client order to buy or sell a certain amount of BTC, ETH or another covered asset.
The bank simultaneously executes an offsetting transaction with a market‑making counterparty or on an exchange.
The bank briefly steps in as principal – taking title to the crypto asset momentarily – and then immediately passes it through to the client.

Because the trades are offset in size and price, the bank takes minimal market risk and is compensated via transparent spreads or fees. The OCC stresses that existing expectations on KYC, AML, market conduct, capital and risk management all continue to apply.

The key shift is that crypto is now explicitly included in the set of assets where this model is allowed.

CFTC pilot: BTC, ETH and USDC as derivatives collateral

On the derivatives side, the Commodity Futures Trading Commission (CFTC) has launched a digital assets pilot program for tokenized collateral, allowing certain regulated intermediaries to use Bitcoin (BTC), Ethereum (ETH) and USDC as margin collateral in U.S. derivatives markets.

According to the CFTC’s pilot announcement, the program:

Gives eligible futures commission merchants (FCMs) and other participants a path to accept BTC, ETH and USDC as customer margin collateral.
Sets out strict rules for custody, segregation, valuation, haircuts and reporting.
Withdraws older guidance that had effectively discouraged using digital assets as collateral, now viewed as outdated after new legislation such as the GENIUS Act.

In the initial phase, the assets list is limited to these three, with the CFTC emphasising that it wants to observe real‑world behaviour under stress before broadening the scope.

Why the CFTC pilot is described as a watershed

Derivatives markets account for the majority of trading volume in crypto, especially for Bitcoin and Ethereum. Until now, many institutional players have been constrained by:

Collateral rules that excluded crypto from margin, forcing firms to rely on cash and Treasuries even when their core exposures were digital assets.
Regulatory uncertainty about whether tokenized collateral would be recognised and supervised within U.S. rules.

By explicitly allowing BTC, ETH and USDC as collateral under a supervised pilot, the CFTC is:

Normalising digital assets as part of the standard collateral toolkit, alongside Treasuries and cash.
Providing a clear framework for tokenized collateral, including real‑world assets like tokenized Treasuries and money‑market funds.
Sending a signal that digital assets can support 24/7, near real‑time margining in U.S. markets, not just offshore venues.

Industry responses from major firms emphasise that this could unlock capital efficiency and make it easier for large institutions to align their collateral with their trading exposures.

The combined impact: from enforcement to integration

Individually, each move is significant. Together, the OCC letter and CFTC pilot amount to a structural shift in how U.S. regulators approach crypto.

The OCC is saying: banks can directly intermediate crypto trades for customers using familiar brokerage models, provided they manage risk and compliance.
The CFTC is saying: crypto assets like BTC, ETH and USDC can be embedded in the collateral plumbing of regulated derivatives markets, under defined guardrails.

The direction of travel is clear:

Crypto is being drawn inside the perimeter of U.S. banking and derivatives regulation.
Integration is happening at the level of core financial functions – brokerage and collateral – rather than via one‑off sandbox experiments.

This marks a notable evolution from a period dominated by enforcement actions and restrictive guidance toward a model of “regulated permission” for specific, well‑defined activities.

What changes for banks, brokers and institutions

If these policies are fully embraced, several practical changes follow.

For U.S. banks

Banks can add crypto trade execution as a service alongside equities, FX and fixed income, keeping client flows onshore and within their own platforms.
They can integrate crypto into existing wealth‑management and corporate‑banking offerings without having to offload clients to third‑party exchanges.
Compliance and risk teams will need to extend existing trade‑surveillance, AML and operational‑risk frameworks to cover digital assets.

For trading firms and asset managers

The CFTC pilot allows them to post BTC, ETH and USDC as margin where they previously had to rely on fiat or traditional securities.
This can reduce funding frictions, especially for firms whose portfolios are already heavily denominated in digital assets.
It may shift some activity back from offshore platforms into CFTC‑regulated venues, particularly for institutions with strict mandates.

For market structure overall

More onshore liquidity in both spot and derivatives markets.
Tighter links between bank brokerage desks, derivatives exchanges and tokenized collateral platforms.
A more complex but potentially more robust interplay between traditional and crypto-native collateral ecosystems.

Risks and open questions

Despite the clear step toward integration, neither move is without risk.

Systemic risk: Bringing crypto exposure into the core of the banking and derivatives system raises questions about how shocks in digital assets might propagate into the broader financial sector.
Operational complexity: Banks and FCMs must manage private keys, wallet infrastructure, and tokenized collateral operations to a standard that matches traditional systems.
Regulatory overlap: The boundaries between the OCC, CFTC, SEC and state regulators will be tested as banks expand crypto brokerage and derivatives players deploy tokenized collateral at scale.
Asset‑quality concerns: Not all digital assets are created equal. Today’s list (BTC, ETH, USDC and a handful of others for brokerage) is relatively conservative, but pressure may build to include more volatile tokens over time.

These issues are part of why the OCC and CFTC have chosen narrow, well‑defined channels – riskless principal brokerage and a collateral pilot – rather than sweeping, open‑ended permissions.

What to watch next

Several concrete developments will show how deep this integration becomes:

Bank product launches: Which large U.S. banks move first to offer in‑house crypto brokerage under the OCC letter, and how they position those services for retail vs institutional clients.
Pilot participation and expansion: Which FCMs and derivatives venues sign up for the CFTC tokenized collateral pilot, and whether the eligible asset list or scope widens after the initial phase.
Risk disclosures and reporting: How firms describe these activities in their public filings and risk reports, and whether regulators push for additional safeguards.
Cross‑regulator coordination: Any joint statements or rulemakings that clarify how banking, securities and derivatives rules intersect for tokenized assets.

The answers will determine whether today’s announcements become the foundation of a lasting bridge between traditional finance and crypto, or remain tightly circumscribed experiments.

Conclusion

The OCC’s Interpretive Letter 1188 and the CFTC’s tokenized collateral pilot mark one of the clearest pivots yet in U.S. crypto policy: from keeping digital assets at arm’s length to weaving them into the existing banking and derivatives framework.

Banks are now explicitly allowed to broker crypto trades as riskless principals, while regulated derivatives intermediaries gain a pathway to use BTC, ETH and USDC as margin collateral under close supervision.

Whether this leads to deeper, safer markets or new forms of interconnected risk will depend on how cautiously institutions implement these powers – and how effectively regulators refine the rules as real‑world data from these programs comes in.

The post US Banks Cleared To Broker Crypto As CFTC Embraces Tokenized Collateral appeared first on Crypto Adventure.

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Filed under: Bitcoin - @ December 10, 2025 9:34 am