State banks that are members of the US Federal Reserve System must obtain a written supervisory nonobjection from the Fed before issuing, holding or transacting in stablecoins.
For banks to receive a written nonobjection to be able to engage with stabelcoins, banks should demonstrate appropriate risk management, including having systems in place to identify and monitor any potential risks, including cybersecurity and illicit finance threats, according to the Fed.
The new announcement comes just a day after payments giant PayPal announced it would launch its own stablecoin pegged to the US dollar.
Prior attempts by major mainstream companies to launch stablecoins have met stiff resistance from financial regulators and politicians, as regulators raised fears it could disrupt global financial stability.