The Clearing Home has launched a analysis paper that analyzes the authorized authority and coverage issues for banks’ engagement in stablecoin-related actions.
The OCC’s 2020 and 2021 letters concluding that nationwide banks have the clear authorized authority to problem and trade stablecoins are soundly based mostly on language within the Nationwide Financial institution Act, and per quite a few authorized selections and regulatory determinations concerning a financial institution’s authority to problem funds and deposit devices.
Nationwide banks have at all times been permitted to develop revolutionary deposit and fee mechanisms, as receiving deposits and appearing as monetary intermediaries are core features of banks.
However that the OCC’s “transparency doctrine” focuses on the authority of a nationwide financial institution to supply a services or products, fairly than how the service is delivered, and stablecoin issuance by banks and stablecoin-related actions represent a brand new technique of accepting, holding and transferring deposits, there was no public assertion of approval granting a federally-insured financial institution the power to problem a customer-facing stablecoin.
“Regulators have clear authorized authority to allow insured banks to problem deposits in digital kind. The OCC’s letters in 2020 and 2021, in addition to quite a few judicial rulings, make it clear that nationwide banks have the authority to problem stablecoins to clients,” stated Rob Hunter, Deputy Normal Counsel, The Clearing Home. “We encourage banking regulators to allow banks to enter into stablecoin issuance. Doing so will higher defend shoppers and the financial system, as federal regulated banks are topic to a full vary of capital, liquidity, cybersecurity and client safety necessities which can be lacking from the stablecoin market immediately.”