The top US banking regulator has announced that national banks and savings associations in the country can use public blockchains and stablecoins for payment activities. Experts say this is good for bitcoin and its importance should not be underestimated.
Banks can use public blockchains and Stablecoins
The Office of the Currency Controller (OCC) published an interpretative letter on Monday “clarifying the authority of national banks and federal savings associations to participate in independent node verification networks (INVN) and to use stablecoins to perform payment activities and other banks allowed functions. ” The OCC oversees nearly 1,200 national banks, federal savings associations and federal branches of foreign banks that conduct approximately 70% of all banking business in the U.S.
“While governments in other countries have built real-time payment systems, the United States relies on our innovation sector to provide real-time payment technologies,” explained the currency’s incumbent controller, Brian Brooks. “Some of these technologies are created and managed by bank consortia and some are based on independent node verification networks, such as blockchains.”
He continued, “The President’s Working Group on Financial Markets recently articulated a solid framework for the beginning of an era of financial infrastructure based on a stable currency,” elaborating:
Our letter removes any legal uncertainty about banks’ authority to connect to blockchains like us validators and thus transact stablecoin payments on behalf of customers who are increasingly demanding the speed, efficiency, interoperability and low cost associated with these products.
The OCC letter concludes that “a national bank or federal savings association can validate, store and record payment transactions by serving as a node in an INVN.” In addition, “a bank may use INVNs and related stablecoins to perform other permitted payment activities. When implementing these technologies, a bank must comply with applicable laws and safe, sound and fair banking practices. “
The cryptographic community broadly welcomes this OCC clarification. Dan Held, growth leader at the Kraken cryptocurrency exchange, commented: “The OCC will allow U.S. banks to use public blockchains and stablecoins as a settlement infrastructure in the US financial system … This is huge for Bitcoin. As an immutable SoV, it has paid off more than a trillion dollars worth annually. “
Emphasizing that “This is a big win for crypto and stablecoins,” explained Circle CEO Jeremy Allaire:
The new interpretative charter states that banks can treat public chains as infrastructure similar to SWIFT, ACH and Fedwire, and stablecoins like USDC as electronic stored value. The significance of this cannot be underestimated.
“Decentralized, unauthorized, open source, Internet-mediated software is literally becoming the foundation not only of the US financial system, but of the global economy,” he said. “It also sets the stage for more regulated financial institutions to run blockchain nodes and even become validators.”
What do you think of this new clarification from the OCC? Let us know in the comments section below.
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