The Office of the Comptroller of the Currency (OCC), part of the U.S. Treasury, has allowed national banks and federal savings associations to hold the reserves of stablecoin issuers.
In OCC letter it is stated that the permission applies only to stablecoins pegged to a single fiat currency at 1:1. The most important condition is the custody of cryptographic [private] keys from a wallet by an identified third party that executes transactions and custody on behalf of account holders. National banks must check at least once a day whether all stablecoins are backed by reserves, the regulator says.
The OCC emphasized that banks must consider liquidity and legal compliance risks in dealing with stablecoin issuers, and ensure compliance with KYC/AML procedures and federal securities laws.
The U.S. Securities and Exchange Commission (SEC) has already stressed that digital assets may not necessarily be securities, but urged issuers to cooperate with the agency ahead of sales.
SEC FinHub statement on OCC interpretation regarding fiat-based “stablecoin” projects; encourages engagement with FinHub staff https://t.co/cJ2ymWS3CR
— SEC_News (@SEC_News) September 21, 2020
A former Coinbase executive and the current head of the OCC, Brian Brooks, added that banks are daily involved in billions of dollars of stablecoin-related activity.
“This decision provides banks with regulatory clarity,” he summed up.
Earlier, the OCC had allowed national banks to hold customers’ cryptocurrencies. Since then, major players — U.S. Bancorp and PNC Financial Services Group — expressed interest in providing such services.
The American regulator has allowed banks to provide custody services for cryptocurrencies
In August 2019, Coinbase confirmed the purchase of the institutional custody business Xapo. That gave Coinbase Custody assets of $7 billion, making the company the largest institutional custodian of digital assets. The deal was valued at $55 million.
Among other large American custodians are Fidelity Digital Assets, BitGo and Bakkt.
Subscribe to ForkLog news on Telegram: ForkLog Feed — the full news feed, ForkLog — the most important news and polls.