The U.S. regulators have given banks and financial institutions the authorization to hold reserves in stablecoins, opening up new opportunities for institutions to service the digital currency sector. In an interpretive letter issued by the Office of the Currency Comptroller, national banks are now allowed to hold reserves of cryptocurrencies and other digital assets. “We conclude that a national bank may hold such stablecoin ‘reserves’ as a service to bank customers.”
National banks already engage in stablecoin related activities.
“National banks and federal savings associations currently engage in crypto related activities involving billions of dollars each day.” The letter gives the first confirmation that banks are permitted to engage in stablecoin business, and could be expected to encourage more institutions to develop their stablecoin reserves. Acting Comptroller of the Currency Brian Brooks revealed that the measures reflect the reality for many national banks, which already engage in activities involving stablecoins. Since taking over the role of Acting Comptroller, Brian Brooks has been active in expanding the function of stablecoins within the U.S. banking system.
This only applies to stablecoins backed 1:1 to a currency.
Earlier this year, a similar interpretive letter was issued, confirming that banks were permitted to offer crypto custody services.However, this week’s letter stopped short of a blanket endorsement of all stablecoins, saying that this only applied to stablecoins backed 1:1 to a currency, rather than those backed by a basket of assets.In particular, this would also exclude some versions of Facebook’s Libra token from being an asset institution was permitted to hold in reserve.
Even stablecoins that are backed 1:1 have come under questioning. Tether (USDT) initially said it was backed 1:1 with U.S. dollar reserves held in New York; however, the company that manages it has admitted that it is no longer the case.