The Office of the Comptroller of the Currency (OCC) released a letter that explained the authority of federal savings associations and national banks to keep “reserves” for clients who are issuers of stablecoins in some cases, according to a Monday (Sept. 21) press release.
Acting Comptroller of the Currency Brian P. Brooks said that federal savings associations and national banks participate in activities related to stablecoins involving billions daily as it stands.
“This opinion provides greater regulatory certainty for banks within the federal banking system to provide those client services in a safe and sound manner,” Brooks said in the announcement.
Stablecoins are digital currency supported by an asset like a fiat currency, such as a U.S. dollar or a currency from another nation.
The office said that the letter finds that federal savings associations and national banks can hold “reserves” for clients who issue stablecoins when the tokens are kept in “hosted wallets.”
It said the letter addresses the use of stablecoins supported by one fiat currency on “a one-to-one basis where the bank verifies at least daily that reserve account balances meet or exceed the number of the issuer’s outstanding stablecoins.”
In other news, Stripe will pay $120,000 to resolve claims that the payment processor’s “risk monitoring and fraud prevention and mitigation practices” contravened Massachusetts’s consumer protection law, according to an announcement from the state attorney general office.
The company processed payments facilitated by “PlexCoin” Owner Dominic Lacroix and his associates, leading to the “fraudulent and unregistered offer and sale of cryptocurrency,” according to office, which cited a Suffolk Superior Court filing.
The “PlexCoin” owner allegedly harnessed Stripe accounts as part of the effort and “and illegally obtained funds from 22 investors in Massachusetts,” according to the announcement.
“The AG’s Office further alleges that Stripe knew or should have known of Lacroix’s fraud in time to prevent harm to Massachusetts consumers, but failed to do so due to its inadequate risk monitoring and fraud prevention and mitigation practices and procedures,” according to the announcement.
The office noted that the settlement mandates procedures to safeguard the payment processor’s clients going forward in addition to regular education for staffers when it comes to averting fraud and keeping watch for risk.