On September 21, 2020, the U.S. Office of the Comptroller of the Currency (OCC), the regulatory agency charged with overseeing banks, published an interpretive letter clarifying national banks’ and federal savings associations’ authority to hold “reserves” on behalf of customers who issue certain stablecoins. 

Generally, a stablecoin is a type of cryptocurrency designed to have a stable value as compared with other types of cryptocurrency, which frequently experience significant volatility. One type of stablecoin is backed by an asset such as a fiat currency.  As the press release accompanying the letter notes, “The letter addresses the use of stablecoins backed by a single 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.”

As the letter explains, stablecoin issuers may want 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.  The guidance provides that a national bank may hold such stablecoin ‘reserves’ as a service to bank customers.  In connection with these activities, a national bank may also engage in any activity incidental to receiving deposits from stablecoin issuers. 

Banks that choose to hold reserves that back stablecoins are expected to understand the risks related to cryptocurrency. The OCC noted that new activities should be implemented with sound risk management controls, especially since stablecoins could expose banks to liquidity risk, and that it “expects all banks to manage liquidity risk with sophistication equal to the risks undertaken and complexity of exposures.”  Furthermore, the letter notes that banks who choose to hold reserves for stablecoins must conduct due diligence including meeting Bank Secrecy Act (BSA), anti-money laundering (AML) and know your customer (KYC) requirements.

The OCC’s guidance only refers to stablecoins held in hosted wallets, meaning wallets controlled by a trusted third party. Unhosted wallets, which are controlled by the individual user who owns the cryptocurrency being stored, were not within the scope of the OCC’s letter.

In coordination with the OCC, the Securities and Exchange Commission (SEC) issued a statement that supported the OCC’s actions.


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. David has been included in Chambers for his expertise in international arbitration. He is the editor of the firm's blockchain blog.