The OCC’s Decisions
Earlier this year, in July, the OCC (Office of the Comptroller of the Currency) allowed US banks to custody cryptocurrencies on behalf of customers. Now, they issued a new guidance for US banks to hold reserve funds on behalf of stablecoin providers.
Banking & Crypto
For the longest time, these two entities were seen as competitors and in some sense they still are. But banks held a certain distance from this asset class, a distance that is now vanishing. The two OCC decisions followed by Kraken Financial gaining a banking charter are proof of this.
Amongst the crypto-industry, stablecoins are crucial when needing to transact on-chain; the latter has become important recently with the DeFi boom. This is mostly visible with the second most-popular stablecoin: USDC issued by Circle. The number of USDC tokens in circulation has almost quintupled since the start of the year.
There are of course worries of centralisation for centrally-issued stablecoins as they represent a single-point of failure. Additionally, censorship is a second worry as we have recently seen Circle Consortium blacklist an address with $100,000 in USDC at the request of law enforcement. While there may have been a very legitimate reason behind it, it is not a community-led (decentralised) decision.