The Clearing House has released a research paper that analyzes the legal authority and policy considerations for banks’ engagement in stablecoin-related activities.
The TCH paper provides information about the legal authority of insured depository institutions to issue stablecoins and engage in stablecoin-related activities, and notes 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.
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.
Notwithstanding that the OCC’s “transparency doctrine” focuses on the authority of a national bank to offer a product or service, rather than how the service is delivered, and stablecoin issuance by banks and stablecoin-related activities constitute a new means of accepting, holding and transferring deposits, there has been no public statement of approval granting a federally-insured bank the ability to issue a customer-facing stablecoin.
"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," said Rob Hunter, Deputy General Counsel, The Clearing House. "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."