The US Federal Reserve says that state member banks must seek approval before interacting with stablecoins.
The Fed released a regulation letter on Wednesday outlining its new rules for “tokens denominated in national currencies and issued using distributed ledger technology,” otherwise known as stablecoins.
“A state-owned bank seeking to engage in activities permitted for national banks under OCC (Office of the Comptroller of the Currency) Interpretive Letter 1174, including issuing, holding or trading dollar tokens to facilitate payments, must demonstrate, to the satisfaction of Federal Reserve regulators that the bank has controls in place to conduct its business in a safe and sound manner.
To verify compliance with this requirement, a state member bank must receive a written notice of no objection from the Federal Reserve regulator before commencing proposed activities.
The regulation letter also notes that even state-owned banks that only want to test stablecoins should check with the Fed before doing so.
In order to receive “no-objection oversight” for interacting with stablecoins, banks must demonstrate that they have put in place “appropriate risk management practices” to address operational, cybersecurity, liquidity, illicit funding and consumer risks.
According to the Federal Reserve Bank of Richmond, more than a third of US commercial banks are members of the Fed.
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