Blockchain and Digital Asset Rules for Credit Unions and Banks
2026-10-02
A new report from the Congressional Research Service highlights a growing dilemma for United States banks and credit unions. The rules for handling cryptocurrency and blockchain technology keep changing with each new administration.
Congress is now considering whether to write those rules into law. The debate centers on a simple question. Should banks and credit unions be allowed to hold digital assets, issue stablecoins, and use blockchain technology? The answer could reshape the financial system.
Key Takeaways
- Banks and credit unions may soon get clearer rules for digital assets.
- The CLARITY Act and GENIUS Act are two key pieces of legislation.
- Regulators have reversed crypto policies multiple times since 2017.
The Two Part Test for Bank Activities
By law, banks can only engage in what is called the business of banking. This includes accepting deposits and making loans. Any other activity must be related to that business. Regulators use a test with two parts to decide if a new activity is allowed.
First, is the activity related to the business of banking? Second, does it pose a risk to the safety and soundness of the bank? There is disagreement about whether crypto activities meet either part of this test.
Read also: H.R. 10357 Breakdown: Inside the Historic U.S. Federal Crypto Tax Framework
A History of Changing Rules
Since 2017, federal bank regulators have repeatedly reversed their positions on crypto. The Office of the Comptroller of the Currency, the Federal Reserve, and the Federal Deposit Insurance Corporation all play a role.
Under one administration, rules may be relaxed. Under another, they may be tightened. These changes come through agency action, not through new laws. That makes them easy to reverse.
The Congressional Research Service report says this pattern creates uncertainty for banks and credit unions.
The GENIUS Act and Stablecoins
One piece of legislation has already made a difference. The GENIUS Act was enacted in July 2025. It made stablecoin issuance, custody, and related activities permissible for subsidiaries of banks.
This means banks can now offer stablecoin services under certain conditions. The law was a first step toward clearer stablecoin rules for credit unions and banks. But it does not cover all crypto activities.
The CLARITY Act and Digital Assets
The CLARITY Act, also known as H.R. 3633, is a broader bill. It would create a comprehensive framework for crypto regulation. The House passed one version. The Senate reported another version. The two versions differ in important ways.
The House version would allow banks to use a digital asset or blockchain to engage in any activity that is otherwise permitted by law.
It would also add certain crypto activities to the list of permissible activities for financial holding companies. However, those activities would not be allowed for bank subsidiaries.
The Senate version would add 11 categories of crypto activities that would be permissible for all types of banking organizations and credit unions. It would also allow banks to underwrite and deal in any digital assets.
This goes beyond what banks are allowed to do in traditional financial markets. For example, banks can currently underwrite and deal in only limited types of securities, such as those issued by federal and state governments.
Risks and Concerns
Allowing banks to engage in crypto activities has benefits and costs. Benefits could include improved bank profitability, consumer convenience, and new business opportunities. Costs could include increased risks to bank safety and soundness and to financial stability.
Because federal deposit insurance and the discount window protect banks, there is a moral hazard. Risks are not fully borne by the banks or their creditors. This can encourage excessive risk taking.
Crypto specific concerns include pseudonymity. This makes it hard to comply with rules against money laundering. Crypto markets are also volatile. Loans collateralized by crypto assets would expose banks to losses if prices fell.
While crypto may not pose systemic risk in isolation, bank exposure to crypto markets could increase systemic risk.
Read also: Republican Senate Leaks a Bit of the Clarity ACT Draft
Three Paths for Congress
The Congressional Research Service outlines three options for Congress. First, Congress could continue to defer to regulators. This would mean accepting more back and forth as administrations change.
Second, Congress could pass legislation that clearly spells out what banks are permitted or prohibited from doing with crypto. Third, Congress could combine both approaches. It could set some rules in statute while leaving regulators discretion over the rest.
Legislation would result in a more durable outcome. It would reduce the likelihood of frequent regulatory changes. But regulators have specialized expertise. They may be better placed to evaluate whether particular activities are unduly risky for banks.
FAQ
Can banks hold digital assets?
Currently, banks can hold digital assets only if the activity is legally permissible and conducted safely. The rules vary by regulator and administration. The CLARITY Act could provide more clarity.
What is the CLARITY Act H.R. 3633 summary?
The CLARITY Act is a bill that would create a regulatory framework for crypto. The House version would allow banks to use digital assets for otherwise permitted activities. The Senate version adds 11 categories of crypto activities for banks and credit unions.
What does the GENIUS Act do for stablecoins?
The GENIUS Act makes stablecoin issuance, custody, and related activities permissible for subsidiaries of banks.
Why have crypto regulations for banks changed so often?
Regulators have reversed policies as presidential administrations changed. These changes come through agency action, not legislation. That makes them easy to reverse.
What are the risks of banks holding digital assets?
Risks include volatility, money laundering concerns, and potential losses on crypto collateralized loans. There is also moral hazard because of the federal safety net.
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