Banks and financial organizations, which are authorized by the Federal Government, will have approval from the United States Office of the Comptroller of the Currency (OCC) to hold reserves in stablecoins.
In a letter recently published by the Office of the Comptroller of the Currency (OCC), the US regulator authorized national banks and other organizations that provide financial services to hold reserves in stablecoins on behalf of their clients, as issuers of these currencies. The letter of authority to hold reserves in stablecoins stablecoins It allows national banks to hold their clients' reserves as long as they are currencies backed by a single fiat currency, in this case the dollar, and that these are kept stored in hosted wallets.
We concluded that a national bank can hold “reserves” in stablecoins as a service to the bank’s customers.”
Likewise, in the letter the OCC indicates that the balances in stablecoins must be able to be reviewed at least once a day and individually, so that the bank can verify that the stored balances comply with the number of stablecoins pending from the issuer, or if applicable, exceed that number. On the other hand, the US regulator defines stablecoins as "a type of cryptocurrency designed to maintain a stable value compared to other types of crypto assets,” which as we well know, frequently experience significant volatility in their price.
With the guidance provided by the regulator, it is expected to have greater clarity and regulatory understanding regarding the operations that can be carried out with this type of assets, in addition to increasing the reliability of stablecoin issuers by keeping their coins in the hands of banks and financial institutions in the United States.
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Fiat-backed stablecoins
According to the regulator, the stablecoins that US banks and financial institutions will be able to hold as reserves are those that are backed by the dollar. In its letter, the OCC is only addressing the use of stablecoins that can be redeemed on a 1:1 basis for the underlying fiat currency; that is, stablecoins backed 1:1 by the US dollar. The rest of stablecoins that are backed by two or more fiat currencies, and that involve multiple currencies such as the project Pound from Facebook, are not allowed as a reservation.
“We are not currently addressing the authority to support stablecoin transactions involving non-hosted wallets. Furthermore, 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 on a daily basis that reserve account balances are always equal to or greater than the number of stablecoins in circulation of the issuer.”
In this way, stablecoin operators can place their assets in a reserve account in national banks, which gives banks the security and reliability that the stablecoin issuer has sufficient assets to back its currency, under the existence of a hosted wallet controlled by a trusted third party.
The federal regulator also noted that banks and financial institutions must consider all relevant risk factors, including liquidity risk and compliance risk, before entering into and accepting any agreement or relationship with a stablecoin issuer.
SEC backs OCC guidance
To assist with understanding of the OCC's letter and interpretations regarding stablecoins, the U.S. Securities and Exchange Commission (SEC) issued a public statement The SEC staff said the OCC’s statements are prepared to engage with interested parties to understand whether stablecoin activities are a “no action” position or whether federal securities laws apply. The SEC staff said the OCC’s statements are very narrowly focused on stablecoins, but that if they are a security under U.S. federal law, then they require a “determination of facts and circumstances.”
Moreover, Brian brooks, Acting Comptroller of the Currency, stated that:
“National banks and federal savings associations are currently engaged in stablecoin-related activities involving billions of dollars each day. This opinion provides greater regulatory certainty for banks within the federal banking system to provide those services to customers in a safe and sound manner.”
Brooks has been implementing several measures to connect the crypto ecosystem with the traditional financial system, as a way to bridge the gap between these two worlds. The acting controller is also encouraging new practices that boost the digital financial model, such as authorizing national banks to offer custody services for cryptocurrencies.
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