The regulator of the nation’s banks has issued its first guidance on stablecoins, the cryptocurrency backed by traditional currency.
A letter by the Office of the Comptroller of the Currency (OCC) published on Monday (Sept. 21) clarified the authority for national banks and federal savings associations to hold reserves on behalf of customers who issue stablecoins.
Acting Comptroller of the Currency Brian Brooks said these financial institutions (FIs) engage daily in stablecoin-related transactions involving billions of dollars. The opinion, he said, aims to provide greater regulatory certainty for banks within the federal banking system to safely provide those client services.
The letter, written by Jonathan Gould, the agency’s senior deputy comptroller and chief counsel, also clarified that the ruling only applies to cryptocurrency on a one-to-one 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 must 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,” Gould wrote.
Allaire said this has been a long time coming. “The biggest problem was they are highly volatile and really still are, because they are more like commodities that people are trading,” he noted.
In July, the OCC announced that providing cryptocurrency custody services, including holding cryptographic keys, is a contemporary form of traditional bank activities.
“From safe deposit boxes to virtual vaults, we must ensure banks can meet the financial services needs of their customers today,” Brooks said at the time. “This opinion clarifies that banks can continue satisfying their customers' needs for safeguarding their most valuable assets, which today for tens of millions of Americans includes cryptocurrency.”
In addition, the OCC said that as financial markets are increasingly digitized, the need will increase for banks and other service providers to leverage new technologies and innovative ways to serve their customers’ needs.
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