Banks licensed by the US federal government already have the authority to hold stable currency reserves
US national banks and other federally established financial institutions are now authorized reserves on behalf of clients that issue certain stablecoins.
The Office of the Comptroller of the Currency (OCC) issued a letter on Monday, September 21, in which the regulator has allowed US financial institutions to back stablecoins of digital dollars. The letter only addresses the use of the stablecoin backed on a 1: 1 basis by a single fiat currency and the holder of the stablecoin can exchange it on a 1: 1 basis for the underlying fiat currency. Stable coins that use a coin basket as Libra they are not allowed.
The OCC, in its letter, noted:
“We are not currently addressing the authority to endorse stablecoin transactions involving non-hosted wallets. Also, this letter only addresses the use of stablecoins backed on a 1: 1 basis by a single fiat currency where the bank verifies at least daily that the reserve account balances are always equal to or greater than the number of stablecoins. in circulation of the issuer.
The Office of the Comptroller of the Currency (OCC) regulates large national banks such as Wells Fargo and J.P. Morgan Chase, so this guide only applies to national associations and federal savings banks. The Securities and Exchange Commission (SEC) has also endorsed these guidelines of the OCC.
The OCC said national banks and federal savings associations can provide permitted banking services to any legal business they choose, including cryptocurrency businesses, as long as they manage risks effectively and comply with AML and other federal security laws. The letter says:
“Consequently, domestic banks may receive deposits from stablecoin issuers, including deposits that constitute reserves for a stablecoin associated with hosted portfolios. In connection with these activities, a national bank may also participate in any activity related to receiving deposits from stablecoin issuers. Similarly, an FSA is authorized to receive deposits, even from an issuer of stablecoins associated with hosted portfolios.
The federal regulator further identifies that reserves associated with stablecoins could pose significant liquidity risks. Therefore, the OCC expects banks to manage liquidity risk with the same sophistication as the risks assumed and the complexity of the exposures.
Brian P. Brooks, the Acting Comptroller of the Currency, commented:
“National banks and federal savings associations are currently engaged in stablecoin activities that involve billions of dollars every day. This opinion provides greater regulatory certainty for banks within the federal banking system to provide those services to clients in a secure and robust manner.
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