US OCC gives green light to financial institutions to support stablecoins backed by the dollar

Quick Take

2 minute read

• A second letter has been issued by the office of the Comptroller of the currency which would allow financial institutions in the United States to back digital dollar stablecoins under Brian Brooks. 

• This second letter would permit banking institutions in the US to hold deposits as reserves for stable coins that represent theatre places such as the United States dollar.

A second letter has been issued by the office of the Comptroller of the currency (OCC) which would allow financial institutions in the United States to back digital dollar stablecoins under the leadership of the acting Comptroller, Brian Brooks. This second letter would permit banking institutions in the US to hold deposits as reserves for stable coins that represent theatre places such as the United States dollar.

For those that don’t know, the OCC regulates some of the biggest financial institutions in the world including Wells Fargo WFC and JP Morgan Chase. This would mean that the guidance from the agency would only apply to national associations and “federal savings banks“. Alongside this announcement from the OCC, the securities and exchange commission in the US also released a statement that supported the new move from the Comptroller.

When it comes to stablecoins, the OCC classifies them quite specifically in this letter as applying to 1:1 back to the stable coins that represent a US dollar. The press release goes on to say; “Stablecoins refer to cryptocurrency backed by an asset such as a fiat currency, including U.S. dollars or other foreign currency.” 

Brooks said of the following in the release:

“National banks and federal savings associations currently engage in stablecoin-related 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.”

As previously mentioned, the SEC in the US are in support of the OCC and the new move they further went on to say:

“We believe that market participants may structure and sell a digital asset in such a way that it does not constitute a security and implicate the registration, reporting, and other requirements of the federal securities laws.”

On top of this though, the SEC seemingly does look to caution that by calling a cryptocurrency a “stablecoin“, it doesn’t mean anything unless it is true, nor does it excuse a cryptocurrency from being declared in security.

It will be interesting to see how this plays out. For more news on this and other crypto updates, keep it with CryptoDaily!