A monumental turn of events took place on Monday for the digital asset space, as Stablecoins became the first cryptocurrencies to received guidelines from the Securities and Exchange Commission (SEC) and the Office of the Comptroller of the Currency(OCC).
According to the official press release, a list of national guidelines were revealed on how fiat-backed cryptos can be treated under the law. Before the current announcement, there had been zero regulation clarity behind the functionality of stablecoins such as Tether and Circle’s USDC.
The press release stated,
“This letter addresses the authority of a national bank to hold deposits that serve as reserves for certain “stablecoins.” stablecoin issuers may desire to place assets in a reserve account with a national bank to provide assurance that the issuer has sufficient assets backing the stablecoin in situations where there is a hosted wallet.”
In addition, it was added that the bank offering services to hold stablecoins on behalf of crypto projects will need to comply with appropriate controls to ensure due diligence on the risks involved while maintaining an understanding with the stablecoin issuer. The banks should facilitate a proper understanding of th risks and issue a review for compliance under applicable laws and regulations, also with regards to the Bank Secrecy Act (BSA) and anti-money laundering.
From an adoption perspective, it is a huge deal as the OCC currently wanted the regulated banks to feel comfortable in providing services to stablecoin issuers.
Brian Brooks, Acting Comptroller of the Currency stated,
“National banks and federal savings associations currently engage in stablecoin related activities involving billions of dollars each day. This opinion provides greater regulatory certainty for banks within the federal banking system to provide those client services in a safe and sound manner.”
With respect to the SEC, the commission indicated that they did not consider certain stablecoins as securities under the federal law but advised issuers to work with the organization to avoid any misunderstanding.
Will more crypto-assets receive regulations now?
To be fair, not in the near future. It is important to note that stablecoins are the least volatile asset in the space, that are ear-marked 1:1 with fiat currency. The only reason the OCC and SEC have allowed stable assets to work under federal law is its association with the U.S dollar. However, it is definitely a start and over time, the paradigm might shift towards regulating more digital currencies in the space.