Stablecoins are growing up: They officially got the sit-down talk on house rules.
Stablecoins are cryptocurrency created to minimize price volatility relative to a “stable” asset. On Monday, the Office of the Comptroller of the Currency (OCC) and the Securities and Exchange Commission (SEC) posted the first regulatory guidance for stablecoins. Before this week, there was no federal clarity around the cryptocurrency.
- In this case, the OCC and SEC are referring to the type of stablecoin that’s backed by fiat money.
The OCC letter clarified that financial institutions can hold “reserves” for stablecoin issuers, as long as the stablecoins involved are held in wallets hosted by a trusted third party. Translation: Stablecoin issuers get clout due to the fact that regulated financial institutions are holding their reserves.
Big picture: The OCC’s release comes on the heels of other efforts to blend crypto into the traditional financial system—like allowing banks to provide services to crypto companies and proposing a national payments charter.
- Still, permission doesn’t mandate action: “These are slow-burn types of things,” Jeremy Allaire, CEO of Circle, told CoinDesk. “Banks don’t move at the speed of crypto.”
Via Morning Brew