Research paper outlines legal authority for bank use of stablecoins


The Clearing House has released a research paper that analyses the legal authority and policy considerations for banks’ engagement in stablecoin-related activities.

The paper provides information about the legal authority of insured depository institutions to issue stablecoins and engage in stablecoin-related activities.

The Clearing House paper noted that the OCC’s 2020 and 2021 letters concluding that national banks have the clear legal authority to issue and exchange stablecoins are soundly based on language in the National Bank Act, and consistent with numerous legal decisions and regulatory determinations regarding a bank’s authority to issue payments and deposit instruments.

In addition, it found that national banks have always been permitted to develop innovative deposit and payment mechanisms, as receiving deposits and acting as financial intermediaries are core functions of banks.

The Clearing House deputy general counsel Rob Hunter said, “Regulators have clear legal authority to permit insured banks to issue deposits in digital form. The OCC’s letters in 2020 and 2021, as well as numerous judicial rulings, make it clear that national banks have the authority to issue stablecoins to customers.

“We encourage banking regulators to enable banks to enter into stablecoin issuance. Doing so will better protect consumers and the economy, as federal regulated banks are subject to a full range of capital, liquidity, cybersecurity and consumer protection requirements that are missing from the stablecoin market today.”

New York State Department of Financial Services has issued new regulatory guidance on setting foundational criteria for USD-backed stablecoins.

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