WASHINGTON, Nov 23 (Reuters) - U.S. banks must seek and obtain written permission from their bank supervisors before engaging in certain activities involving cryptocurrency, a major regulator said on Tuesday. The Office of the Comptroller of the Currency said banks must be able to demonstrate they have appropriate risk management tools before taking on activities like providing custody services for customers" crypto holdings. “Because many of these technologies and products present novel risks, banks must be able to demonstrate that they have appropriate risk management systems and controls in place to conduct them safely," said acting Comptroller Michael Hsu in a statement. The new stance from the regulator places a higher bar on banks considering some crypto activities, after the agency under former President Donald Trump cleared the way for banks to engage in some crypto work. Under the new interpretive letter, banks are not allowed to engage in several crypto-related activities, such as providing custody for crypto assets and using dollar deposits and reserves to back "stablecoins," without first notifying their bank supervisors of their intention to engage in that activity. Supervisors will then review the bank"s risk management tools and systems, and allow the activity only if banks demonstrate they can do so in a safe and sound manner. A separate joint statement from the Federal Reserve, Federal Deposit Insurance Corporation and the OCC issued on Tuesday said banking regulators intend to clarify in 2022 what role traditional banks can legally play in the cryptocurrency market. L1N2SE1RJ Reporting by Pete Schroeder; Editing by Dan Grebler