OCC says national banks may hold reserves for certain fiat-backed stablecoins
The OCC issues guidance allowing U.S. national banks to hold reserve currencies for stablecoin issuers, further embracing crypto infrastructure.
On September 21, 2020, OCC says national banks may hold reserves for certain fiat-backed stablecoins. The OCC issues guidance allowing U.S. national banks to hold reserve currencies for stablecoin issuers, further embracing crypto infrastructure.
The September letter specifically addressed whether banks could hold fiat currency reserves backing stablecoins, providing legal clarity for an important element of stablecoin operations and potentially encouraging more traditional banks to engage with cryptocurrency businesses. Stablecoin s, which were designed to maintain stable value by being backed by fiat currency reserves, required trusted institutions to hold those reserves and facilitate redemptions.
Major stablecoins like USDC, USDT (Tether), and others claimed to maintain dollar reserves equal to the number of tokens in circulation, but questions about whether these reserves actually existed and whether they were properly audited had created controversy and regulatory scrutiny. The OCC's guidance that banks could serve as reserve holders for stablecoins potentially improved the stability and legitimacy of these arrangements by bringing them under traditional banking regulation and oversight.