Weekly Fintech Focus

  • OCC releases Interpretative Letter that clarifies national banks’ and federal saving associations’ ability to hold certain stablecoins as reserves in a hosted wallet.
  • California DBO awards grants for financial education and empowerment programs.

OCC Releases Interpretative Letter Clarifying That National Banks Can Hold Certain Stablecoin Reserves and the SEC Comments on Their Classification

The Office of the Comptroller of the Currency (OCC) published an Interpretive Letter that clarified national banks’ and federal savings associations’ authority to hold reserves on behalf of customers who issue certain stablecoins. Stablecoins are cryptocurrencies that are backed by an asset such as fiat currency (e.g., U.S. dollars).

As Comptroller Brian Brooks noted, “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.”

Notably, the letter concludes that national banks may hold stable coin reserves in a hosted wallet as a service to bank customers but does not address the authority to support stablecoin transactions involving un-hosted wallets. Moreover, the OCC expressly limited its interpretation to the use of a stablecoin that is backed on a 1:1 basis by a single fiat currency where the bank verifies at least daily that reserve account balances are always equal to or greater than the number of the issuer’s outstanding stablecoins.

The U.S. Securities and Exchange Commission (SEC) simultaneously noted that certain stablecoins may not be classified as securities under federal law and that the SEC would be willing to publish a no-action letter to that affect based on the facts and circumstances relating to such stablecoins.

California DBO Awards Grants for Financial Education and Empowerment Programs

The California Department of Business Oversight (DBO) announced an award of nearly $1 million in CalMoneySmart grants to 12 separate California nonprofit organizations to support new and existing financial education and empowerment programs.

The DBO launched CalMoneySmart early this year and received nearly 100 proposals statewide. After reviewing and scoring each, the DBO Commissioner made the final selections and noted that the “funds will affect positive change for unbanked and underbanked Californians, so they, too, can take full advantage of the financial services many of us consider essential.”

The CalMoneySmart program consisting of a $4 million fund was authorized by California Governor Gavin Newsom in October 2019. For additional information on the CalMoneySmart program, please visit here or email CalMoneySmart@dbo.ca.gov.