The U.S. Office of the Comptroller of the Currency (OCC) Monday issued its first official guidance on stablecoins, which are cryptocurrency whose value is linked to traditional currency holdings. The OCC guidance is potentially game-changing, given that it confirms that U.S. banks can provide services to stablecoin issuers. U.S. Banks are already providing services to crypto issuers, but as with various parts of the unregulated crypto market, there has always been the concern that doing so could potentially be illegal.
The ruling only applies to stablecoins backed on a one-to-one basis by a single fiat currency.
Under existing law, as determined by the OCC, the legality of stablecoins has now been made clear. The acting Comptroller of the Currency Brian Brooks said in a statement that National banks and federal savings associations currently engage 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 client services in a safe and sound manner,” he added. The statement also clarified that the ruling only applies to crypto backed on a one-to-one basis by a single fiat currency.
A bank providing stablecoin services must comply with all regulations.
“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,” the letter reads.
While good news for stablecoin issuers, the “single fiat currency” part may complicate things for the Facebook-backed Libra Association. The latest incarnation of Facebook’s long-planned online kind-off cryptocurrency was said to be based on Facebook having multiple currencies deposited in support for the Libra currency.