OCC concludes national banks have authority to hold stablecoin reserves

In an Interpretive Letter, the OCC affirmed the authority of a national bank or federal savings association to hold stablecoin reserves for customers, subject to certain conditions.

The OCC emphasized that its interpretation (i) applies only to the use of stablecoins backed by only one fiat currency on a 1:1 basis, where the reserve account is verified at least daily by a bank to ensure that the account balance is always equal to or greater than the issuer's outstanding stablecoins, and (ii) does not address stablecoin transactions that involve un-hosted wallets.

Additionally, the OCC clarified that financial institutions holding stablecoin reserves for their customers are required to:

  • comply with all applicable regulations, including federal securities laws;
  • ensure the implementation of suitable controls, and conduct adequate due diligence proportionate to the risks associated with holding stablecoin reserves (and engaging in a business relationship with a stablecoin issuer);
  • include in their due diligence processes a review for compliance with Bank Secrecy Act ("BSA") and AML regulations; and
  • accurately ascertain the beneficial owners of any legal entity customers opening such accounts.

In a related statement, the SEC's Strategic Hub for Innovation and Financial Technology Staff ("FinHub Staff") emphasized that consideration of a stablecoin as a security is based fundamentally on a "facts and circumstances determination."

FinHub Staff asserted that the label of a digital asset or any related service may not align with how such an asset or service is defined and treated under the regulations administered by the SEC.

Accordingly, FinHub Staff encouraged entities seeking involvement in the structuring or sale of a digital asset to contact it with questions or for the consideration of no-action relief, if appropriate.

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