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Tuesday, December 1, 2020

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  • The US Comptroller of the Currency published a new crypto-related decision yesterday.
  • The decision noted that national banks are free to hold reserve funds for stablecoin issuers.
  • Current rules and regulations are still enforced, and banks will have to be compliant before entering deals.

Brian Brooks, the acting US Comptroller of the Currency, recently made a massive crack in the US’ anti-crypto armor by allowing banks to offer crypto custody. Now, the Comptroller made another major announcement, noting that national banks and federal savings associations can hold reserve funds for stablecoin issuers.

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The new announcement came out as part of a six-page interpretive letter, which noted that stablecoin issuers might want to place assets in reserve accounts with a national bank. Doing so would provide the assurance that they do, in fact, have sufficient assets to back their stablecoin.

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“For the reasons discussed below, we conclude that a national bank may hold such stablecoin “reserves” as a service to bank customers,” the Comptroller wrote.

Details regarding the decision

Moving forward, the comptroller’s office noted that they are not addressing the authority to support stablecoin transactions that involve unhosted wallets. Instead, the letter only addresses the use of stablecoin backed on a 1:1 basis. Furthermore, it only involves those stablecoins that are backed by a single fiat currency.

Naturally, banks that start offering these kinds of services will adhere to AML and KYC regulations, in addition to federal securities laws.

With that being the case, the letter concluded that “A bank should consider all relevant risk factors, including liquidity risk and compliance risk, before entering any agreement or relationship with a stablecoin issuer.

As mentioned, the new decision comes briefly after the decision to allow banks to offer crypto custody solutions, and it continues to build on it. Many believed it to be a great decision, and now, since banks seem to work with billions dollars per day with stablecoin-related activities, the Comptroller saw fit to address this issue next.

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