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U.S. Banks Get Approval to Hold Reserve Funds for Stablecoins

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The OCC and the SEC have released new guidance detailing all the operational requirements for U.S. national banks to reserve funds while working with a stablecoin issuer.

On Monday, September 21, the U.S. Office of the Comptroller of the Currency (OCC) gave a regulatory nod to all federally chartered banks in the United States to hold reserve funds for stabelcoins. The OCC and the SEC jointly published the stablecoins guidance providing a detailed overview of stablecoin operations under the U.S. law.

So far, stablecoins operators were using U.S. banks for fiat sourcing. However, the regulatory clarity with respect to the operations was missing. The new guidance provides a clear understanding of stablecoin operations to the U.S. banks. In the press release, the acting Comptroller of the Currency Brian P. Brooks said:

“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.”

The letter also notes that stablecoin operators can place assets in a reserve account with the national banks. This is to provide the banks with the assurance and confidence that the issuer has sufficient assets “backing the stablecoin in situations where there is a hosted wallet”. The bank will verify on a daily basis that the reserve account balances are always equal to or more than the issuers’ outstanding stablecoins. The OCC further added:

“[w]e are not presently addressing the authority to support stablecoin transactions involving un-hosted wallets. In addition, this letter only addresses the use of stablecoin backed on a 1:1 basis by a single fiat currency”

Dealing with Stablecoins in U.S.

In the letter, while referring to the USD-backed stablecoins, the OCC detailed how banks should handle the reserves. Under the leadership of OCC’s acting head Brian Brooks, the regulator has initiated several measures to bridge the gap between the crypto space and the existing financial system.

Recently, the OCC also permitted nationalized banks to offer crypto custodial services. Besides, it has also floated a national payment charter for fintech firms and other crypto exchanges. OCC’s pro-crypto approach shows that the U.S. is working on some major regulatory changes to accommodate cryptocurrencies.

Several stakeholders and industry analysts have cheered the move by the regulators. In the concluding note, the letter from the OCC asks banks to take due diligence and other risk factors before joining hands with any stablecoin issuer. It states:

“A bank should consider all relevant risk factors, including liquidity risk and compliance risk, before entering any agreement or relationship with a stablecoin issuer. The due diligence process should facilitate an understanding of the risks of cryptocurrency and include a review for compliance with applicable laws and regulations, including those related to the Bank Secrecy Act (BSA) and anti-money laundering”.

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.



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Coin98 gains 1,200% after Binance listing, Ampleforth soars on Aave integration

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Few things in the cryptocurrency space generate more hype than a new token listing because the prospect of finding a rare 1000x coin continues to be a top goal of many crypto investors. 

Coin98 (C98) is the most recent example of this phenomenon after the Binance Smart Chain-based decentralized finance (DeFi) solution rallied 1,200% from its initial coin offering price at $0.075 to $0.928 on its first day being listed on exchanges.

Coin98 is the 20th project to come out of the Binance Launchpad and describes itself as “a DeFi gateway for traditional finance users to access any DeFi services on multiple blockchains.”

Along with being listed on Binance, C98 is also available to trade on Gate.io and MEXC Global and token holders can also earn a yield through staking and liquidity pool options on PancakeSwap (CAKE).

Altcoins post double-digit gains

Bitcoin’s (BTC) rally to $33,000 led to a prolonged boost in several altcoins and data from Cointelegraph Markets Pro and TradingView shows Ampleforth (AMPL), Amp (AMP) and Axie Infinity (AXS) as the top movers over the past 24 hours. 

Top 7 coins with the highest 24-hour price change. Source: Cointelegraph Markets Pro

AXS’s month-long rally picked up steam again after the price rebounded from its lower support touch at $14 and the rally in AMPL demonstrates the benefit of cross-protocol integrations.

Related: Bull or bear market, creators are diving headfirst into crypto

According to Ampleforth’s Twitter, the new-found interest in AMPL is the result of the token being added to the AAVE DeFi ecosystem

VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for AMPL on July 19, prior to the recent price rise.

The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

VORTECS™ Score (green) vs. AMPL price. Source: Cointelegraph Markets Pro

As seen on the chart above, the VORTECS™ Score for AMPL first turned green on July 17 and climbed to a high of 75 on July 19, around 15 hours before the price increased 57% over the next three days.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.