Other firms in discussions about pursuing banking charters include the US-based crypto exchange Coinbase and stablecoin issuer Paxos. These moves come at a time when the US is working to reshape its approach to stablecoin regulation.
According to a report from the Wall Street Journal, these firms are exploring the possibility of securing banking licences, which would allow them to operate more similarly to traditional banks. Obtaining a bank charter could enable crypto firms to offer services such as taking deposits and providing loans. The regulatory benefits include greater legitimacy and the potential to offer a wider range of financial products, positioning these companies as significant players in the evolving digital asset market.
Paxos, a stablecoin issuer, was granted preliminary conditional approval for a US bank charter in 2021 by the Office of the Comptroller of the Currency (OCC). The news comes as the US continues to refine its legal framework for stablecoins, a process that could significantly affect how digital assets are regulated in the country.
US Federal Reserve Chair Jerome Powell recently expressed support for the establishment of a legal framework for stablecoins, acknowledging that as digital assets gain mainstream adoption, clearer regulations are necessary. Powell noted that while the crypto space has seen a wave of failures and frauds, it has also delivered a consumer-use case with wide appeal.
In April, the US House Financial Services Committee passed a Republican-backed stablecoin framework bill, the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act. The bill aims to introduce stricter federal oversight for stablecoin operations. Additionally, the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which has already passed through the US Senate Banking Committee, offers a more flexible regulatory approach that combines state and federal oversight.
While both bills focus on regulating the stablecoin industry, they differ in their approach. The STABLE Act includes a two-year moratorium on issuing collateralised stablecoins backed by self-issued digital assets and mandates that stablecoin reserves be held separately from business funds. This ensures customer deposits are not used for business operations.
On the other hand, the GENIUS Act aims to establish a legal framework for stablecoin payments and support US-based stablecoin issuers in reinforcing the dollar’s global dominance. The GENIUS Act also includes stricter rules, such as better AML safeguards, liquidity and reserve standards, and sanctions checks.
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