SEC FinHub Staff Statement on OCC Interpretation
SEC FinHub Staff
Sept. 21, 2020
The Securities and Exchange Commission Strategic Hub for Innovation and Financial Technology Staff (FinHub Staff) issues this statement[1] on an interpretation published by the Office of the Comptroller of the Currency (OCC Interpretation)[2] addressing the authority of national banks and federal savings associations to hold stablecoin reserves. The OCC has limited its Interpretation to holding reserves of a stablecoin associated with hosted wallets that is backed by a single fiat currency and redeemable by the holder of the stablecoin on a 1:1 basis for the underlying fiat currency upon submission of a redemption request to the issuer.
Whether a particular digital asset, including one labeled a stablecoin, is a security under the federal securities laws is inherently a facts and circumstances determination. This determination requires a careful analysis of the nature of the instrument, including the rights it purports to convey, and how it is offered and sold.[3]
We believe that market participants may structure and sell a digital asset in such a way that it does not constitute a security and implicate the registration, reporting, and other requirements of the federal securities laws. However, the label or terminology used to describe a digital asset or a person engaging in or providing financial activities or services involving a digital asset, may not necessarily align with how that asset, activity, or service is defined under the laws and rules administered by the SEC. We encourage parties seeking to structure and sell a digital asset, or to engage in related activities, to contact the FinHub Staff through www.sec.gov/finhub with any questions they may have to help ensure that such digital assets are structured, marketed, and operated in compliance with the federal securities laws. The Staff stands ready to engage with market participants to assist them and to consider providing, if appropriate, a "no-action" position regarding whether activities with respect to a specific digital asset may invoke the application of the federal securities laws.
[1] This statement represents Staff views and is not a rule, regulation, or statement of the Commission. The SEC has neither approved nor disapproved its content. SEC Staff statements, like all SEC Staff guidance, have no legal force or effect: they do not alter or amend applicable law, and they create no new or additional obligations for any person.
[2] See OCC Interpretation (Sept. 21, 2020).
[3] See SEC v. W.J. Howey Co., 328 U.S. 293 (1946); Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce Fenner & Smith, 756 F.2d 230 (2d Cir. 1985). Market participants are encouraged to review the materials relating to digital assets published on www.sec.gov/finhub. For example, the FinHub Staff has published a framework to assist market participants in determining whether a particular digital asset is an investment contract and therefore a security. See Framework for “Investment Contract” Analysis of Digital Assets (Apr. 3, 2019).