Odaily Frontline｜Major Milestone: U.S. Regulators Publish Stablecoin Guidelines

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2020-09-22 11:22 (UTC+8)

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U.S. banks could hold reserves for stablecoin issuers, the OCC said.

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U.S. banks could hold reserves for stablecoin issuers, the OCC said.

This article comes fromBeincrypto, by Gerelyn Terzo

Odaily Translator |

Stablecoin issuers now enjoy strong support from U.S. regulators. Banks finally have some guidance on how to handle Tether, Gemini Dollar, USD Coin and other fiat-pegged tokens. Therefore, they have no reason to shy away from the cryptocurrency industry.The Office of the Comptroller of the Currency (OCC) is an independent agency of the U.S. Department of the Treasury.OCC in a letter of explanation

U.S. Federally Chartered Banks and Federal Savings Associations are allowed to hold reserves for stablecoin issuers.As a result, stablecoin issuers don’t have to worry about banks suddenly closing accounts holding reserve funds that back their stablecoins. According to the OCC’s letter, the decision applies to stablecoins pegged 1:1 to a “single fiat currency” (According to CoinDesk

“A stablecoin is backed by an asset such as fiat currency. Reports show that stablecoins have multiple uses, including the potential to increase payment capacity at scale, and that they are in increasing demand,” the letter states. As discussed below, stablecoins Issuers may wish to deposit assets into a reserve account at a national bank to ensure that the issuer has sufficient assets to back the stablecoin in the presence of a custodial wallet. For reasons discussed below, we conclude that national banks can hold Such stablecoin 'reserves' are made as a service to the bank's customers. We currently have no authorization to support stablecoin transactions involving non-custodial wallets."

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US SEC Response, in response to the OCC's interpretation of stablecoins. FinHub acknowledged that the structure of digital assets may not meet the definition of a security. However, they added, market participants' perceptions of what constitutes a security may not match the SEC's definition. As such, they urge digital asset issuers to contact the committee first. The Center stands ready to engage with market participants to assist them and consider, where appropriate, "no-action" letters as to whether activities related to a particular digital asset may invoke the application of the federal securities laws.

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American tech innovation takes a step forwardThe cryptocurrency community was quick to cheer the support.Circle CEO Jeremy Allaire said:

The progress is "very encouraging".Kristin Smith, executive director of the Blockchain Association, pointed out

, the OCC’s interpretation of the stablecoin market is an important step toward the widespread adoption of a “digital dollar” without the need for a central bank digital currency (CBDC).

She said, “Public blockchains will upgrade our financial system, and the Blockchain Association (@BlockchainAssn) firmly believes that America should lead in these innovations. Today’s action marks an important milestone in that journey.”

For that matter, she is still awaiting further clarification on the roles of custodial and non-custodial wallets.