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The Office of the Comptroller of the Currency published an interpretive letter on September 21, 2020 (Letter), confirming that national banks and federal savings associations (together, banks) may hold “stablecoin” reserves as a service to bank customers.1 This guidance follows an earlier interpretive letter published by the OCC in July confirming the authority of banks to provide cryptocurrency custody services.2 A stablecoin is a particular type of cryptocurrency that is backed by another asset (e.g., a fiat currency or a commodity) in order to reduce volatility in the price of the stablecoin.
In a corresponding statement on September 21, the staff of the Securities and Exchange Commission’s Strategic Hub for Innovation and Financial Technology (FinHub Staff) issued a reminder (FinHub Staff Statement)3 that whether a digital asset is a security, including a stablecoin, is a facts-and-circumstances analysis that requires application of the test from SEC v W.J. Howey Co. and its progeny, as well as consideration of applicable SEC guidance, (e.g., the Framework for “Investment Contract” Analysis of Digital Assets). The Letter and the FinHub Staff Statement further confirm the willingness of the OCC and the SEC, respectively, to engage with the cryptocurrency industry to provide regulatory clarity.
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