OCC says banks can hold stablecoin reserve deposits

In an interpretative letter, the US Office of the Comptroller of the Currency (OCC) addressed the authority of a national bank to hold deposits that serve as reserves for certain stablecoins. Generally, a stablecoin is a type of cryptocurrency designed to have a stable value as compared with other types of cryptocurrency, which frequently experience significant volatility. One type of stablecoin is backed by an asset such as a fiat currency.

The OCC concluded that a national bank may hold such stablecoin reserves as a service to bank customers, but for now the interpretation is limited in the context of a hosted wallet backed on a 1:1 basis by a single fiat currency. A bank providing services in support of a stablecoin project must comply with all applicable laws and regulations and ensure that it has instituted appropriate controls and conducted sufficient due diligence commensurate with the risks associated with maintaining a relationship with a stablecoin issuer. The due diligence process should facilitate an understanding of the risks of cryptocurrency and include a review for compliance with applicable laws and regulations, including those related to the Bank Secrecy Act and anti-money laundering.

The Securities and Exchange Commission weighed in on the OCC’s interpretation, stating: “We believe that market participants may structure and sell a digital asset in such a way that it does not constitute a security and implicate the registration, reporting, and other requirements of the federal securities laws. However, the label or terminology used to describe a digital asset or a person engaging in or providing financial activities or services involving a digital asset, may not necessarily align with how that asset, activity, or service is defined under the laws and rules administered by the SEC.”

Read the full letter

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