Banking And Digital Assets: Key Takeaways From The President’s Working Group Report – Financial Services
On July 30, 2025, the President’s Working Group on Digital
Asset Markets (PWG) released “Strengthening American Leadership in Digital
Financial Technology,” a comprehensive digital asset
report (Report) mandated by President Trump shortly after he took
office for his second term. The Report addresses market structure,
stablecoins, money laundering, sanctions, and taxation, as well as
banking and digital assets. The chapter on banking signals how
banks may elect to expand into digital asset custody, trading, and
related services in the years ahead.
From Executive Order to Blueprint
The PWG was created by executive order to unify the federal
government’s approach to digital assets. Unlike an advisory
committee, it operates as a high-level interagency council chaired
by the Special Advisor to the President for AI and Crypto, David
Sacks, with senior leadership from the U.S. Department of the
Treasury, Federal Reserve System, Securities and Exchange
Commission, Commodity Futures Trading Commission, and other
regulators.
Because it convenes the nation’s top financial regulators, a
PWG report functions as a consensus blueprint. It reflects not only
regulatory thinking, but also the administration’s broader
strategy — guidance that supervisors across the banking
system are expected to follow. Unlike other recommendations
included in the Report, those concerning banking can be adopted
without legislation. They are therefore more likely to occur, and
speedily too. For banks, fintechs, and investors, the Report is the
clearest signal yet of where digital asset policy is headed.
How We Got Here: Banks and Digital Assets
For much of the past decade, U.S. regulators took an
unpredictable — and increasingly hostile — stance
toward digital assets that chilled bank participation. Banks that
participated in the digital asset industry at all limited
themselves to core services for industry participants, avoiding
custody, settlement, and execution.
That changed with the beginning of Trump’s second term. The
new administration prioritized digital asset reform and installed
experienced leadership to overhaul the regulatory framework.
Reflecting that shift, financial regulators have rescinded
restrictive guidance and jointly affirmed that banks may engage in
digital asset custody and related activities, subject to robust
risk management. Recent developments include:
- March and May 2025: The Office of the
Comptroller of the Currency (OCC) issued interpretive letters
rescinding limits imposed by the prior administration and
confirming that banks can buy, sell, and outsource crypto assets
and cryptoasset activities.1 - March 2025: The Federal Deposit Insurance
Corporation (FDIC) rescinded previous guidance, clarifying that
“FDIC-supervised institutions may engage in permissible
activities, including activities involving new and emerging
technologies such as crypto-assets and digital assets, provided
that they adequately manage the associated
risks.”2 - April 2025: The Federal Reserve Board (FRB)
removed supervisory guidance that discouraged digital asset
activities.3 - July 2025: The FRB, OCC, and FDIC issued a
joint statement, entitled “Interagency Guidance on
Crypto-Asset Safekeeping,” establishing baseline expectations
for custody activities.4
Report Recommendations: Toward a Clearer, Technology-Neutral
Framework
The Report urges regulators to evaluate banks based on how they
manage risks — not on whether products rely on blockchain,
tokenization, or other infrastructure. Treating decentralization or
blockchain systems as categorically off-limits, it warns, would
stifle innovation.
Key recommendations include:
- Clarifying permissible digital asset activities such as
custody, sub-custody, stablecoin reserves, and deposit
tokenization - Finalizing the removal of “reputation risk” as a
basis for supervisory criticism by the banking agencies - Providing transparency in the process and timeline for
obtaining bank charters and Reserve Bank master accounts - Encouraging state-chartered bank innovation and pilots
- Reviewing the calibration of capital requirements for credit
risk, market risk, operational risk, and liquidity risk to
incorporate empirical evidence of recent changes in digital asset
performance and risk - Advocating for Basel Committee standards that better align with
digital asset risk profiles
In short, regulators are signaling that banks may go deeper into
the digital asset industry, providing additional products and
services without asking permission and without fear of adverse
regulatory consequences, so long as compliance, capital, and risk
management match the rigor expected for traditional financial
products.5
Opportunities Wrapped in Risk: The Legal & Compliance
Challenge
Even with these recommendations, the road ahead remains layered
with legal and compliance challenges:
- Custody and Capital Treatment: While agencies
reaffirm that custody of digital assets is permissible, rules
remain unsettled on structure, fiduciary status, and scope. Capital
treatment also remains conservative, often classifying digital
assets as “high-risk” regardless of volatility or
collateral. Until new standards take hold, banks must engage
regulators early and design frameworks that balance profitability
with compliance. - Chartering and Master Accounts: Securing
charters and Reserve Bank master accounts remains unpredictable,
with opaque approval pathways and inconsistent timelines. While the
Report calls for greater transparency, institutions should expect
continued friction and additional costs until reforms are
implemented. - Third-Party and Partnership Risks: Banks
relying on fintech or vendor partners must carefully allocate
anti-money laundering, sanctions compliance, disclosure, and
reporting duties. Regulators have emphasized that banks cannot
outsource compliance accountability; the chartered institution will
always be held responsible. That means tightening oversight of
counterparties, strengthening contract provisions, and ensuring
that controls match regulatory expectations. - Cross-Border Complexity: Digital assets are
traded globally, but U.S. law is limited to the United States.
Divergent standards on classification, taxation, and leverage
create legal and operational friction. The Report encourages deeper
U.S. engagement with international standard-setters. But, until
convergence occurs, U.S. institutions must invest in compliance
strategies that can operate across multiple jurisdictions.
Litigation and Enforcement: The Critical Overlay
A friendlier regulatory tone does not eliminate litigation or
enforcement risk. Supervisors retain broad authority. Failures in
custody, disclosure, or risk management can trigger enforcement
actions, shareholder claims, and customer suits. Vendor failures
and loss events can quickly escalate into private litigation.
Robust documentation, controls, and monitoring remain essential
safeguards.
The Road Ahead: Building a Durable Framework
The PWG recommendations are the first coordinated federal
digital asset strategy — one that unites regulators,
policymakers, and enforcement agencies. Even if a future
administration takes a different view, it will be far harder to
unwind a coordinated interagency framework once supervisory
expectations, market practices, and cross-border commitments have
been set.
For financial institutions, that means two things:
- Near-term: The window for innovation has never
been clearer. Early movers are likely to shape the standards that
regulators will refine. - Long-term: Success requires building programs
resilient enough to withstand both regulatory tightening and
loosening — recognizing that supervisory intensity may
fluctuate — but that market acceptance and demand for digital
assets is persistent and increasing.
Foornotes
1. OCC Interpretive Letter No. 1183 (Mar. 15, 2025) & Interpretive Letter
No. 1184 (May 6, 2025).
2. FDIC Interpretive Letter No. 7-2025 (Mar. 28, 2025).
3. FRB Press Release, “Federal Reserve Board
Removes Supervisory Guidance on Digital Asset Activities”
(Apr. 24, 2025).
4. FRB, OCC, FDIC Joint Statement, “Crypto-Asset
Safekeeping by Banking Organizations” (July 14, 2025) at p. 6,
n. 8.
5 PWG Report at 72.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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