In brief

  • The US Office of the Comptroller of the Currency has officially clarified that stablecoin issuers may hold reserve in national banks and federal savings associations.
  • Several stablecoin issuers already hold fiat reserves in national banks.
  • According to the OCC's interpretive letter, reserve accounts can either be funded through deposits from the stablecoin issuer or the stablecoin holders.

The Office of the Comptroller of the Currency (OCC), part of the US Department of the Treasury, today publicly confirmed that national banks and federal savings associations can hold reserves for stablecoin issuers.

The OCC's interpretive letter was meant to reassure stablecoin issuers and their customers alike that the common practice of putting reserve funds into national banks (i.e., federally chartered commercial banks) can continue, provided those "coins are in hosted wallets." The OCC is charged with issuing bank charters and regulating banks' activities.

Stablecoins are digital assets backed by another asset, often fiat currency such as the US dollar, so that their value remains relatively steady. Dollar-backed stablecoins include Tether, Gemini dollar, and USD Coin.

"As the OCC recently reaffirmed, national banks may provide permissible banking services to any lawful business they choose, including cryptocurrency businesses, so long as they effectively manage the risks and comply with applicable law, including those relating to the [Bank Secrecy Act] and anti-money laundering," the letter reads. "Accordingly, national banks may receive deposits from stablecoin issuers, including deposits that constitute reserves for a stablecoin associated with hosted wallets."

The letter goes on to state that those reserve accounts can either be funded through deposits from the stablecoin issuer or as deposits from individual stablecoin holders.

Circle CEO Jeremy Allaire, whose company (along with Coinbase) is behind the dollar-backed USDC stablecoin, said, "The guidance validates the approach we have taken in building a resilient, powerful and open standard for the use of digital dollars on the internet."

Though nothing for Circle changes, Allaire believes the letter will positively affect the cryptocurrency industry at large:

"With this clarity from the US Treasury Department around the standards for banks to hold reserves on behalf of stablecoin issuers, businesses of all sizes, fintech firms and banks can have more confidence in building on this innovation, while also ensuring that the guardrails and risk management expected from the US banking system can be applied to this new age of internet money."

In July, the OCC issued another interpretive letter clarifying that US banks could act as cryptocurrency custodians.