Banks regulated by the federal government can use stablecoins to make payments and other activities, the Office of the Currency Controller (OCC) said on Monday.
The federal banking regulator published an interpretive letter addressing whether national banks and federal savings associations could participate in independent node verification networks (INVNs, also known as blockchain networks) or use stablecoins. The letter said that these financial institutions can participate like us in a blockchain and store or validate payments.
All banks participating in an INVN must be aware of operational, compliance or fraud risks when doing so, warned an OCC press release.
Still, the OCC said that INVNs “can be more resilient than other payment networks” due to the large number of nodes needed to verify transactions, which in turn can limit the breach.
Kristin Smith, executive director of the Blockchain Association, said on Twitter that “the letter states that blockchains have the same status as other global financial networks, such as SWIFT, ACH and FedWire”.
Brian Brooks, the incumbent’s currency controller, said in a statement that while other nations have built real-time payment systems, the US has “trusted” the private sector to create such technologies, apparently endorsing the use of cryptocurrencies – specifically stablecoins – as an alternative to other real-time payment systems.
Brooks oversaw the publication of two other interpretive letters and a series of other crypto-friendly measures during his time at the agency, including a letter telling federal banks that they can provide services to stable currency issuers and store currency reserves. stable.
Last month, Brooks announced his support for a letter from the President’s Working Group on Financial Markets, which described how stablecoins should be regulated in the United States.
President Donald Trump twice appointed Brooks to a five-year term at the agency, including earlier this week. However, it is not clear whether the United States Senate will schedule a confirmation vote. So far, it does not seem likely that he will do so before President-elect Joe Biden takes office on January 20.
Monday’s letter of interpretation also arrives on the same day as the end of a public comment period on a proposed Financial Crime Enforcement Network (FinCEN) rule. The controversial rule had only a 15-day comment period and was reportedly led by Treasury Secretary Steven Mnuchin, who appointed Brooks to the OCC in early 2020.
“[Monday’s OCC letter] it will show that there is no total attack on cryptocurrencies, that there are bright spots in the government that realize that cryptographic networks will be the basis of future payment systems and other financial services applications, so we welcome this type of interpretation guidance, ”said Smith to CoinDesk by phone.
Read the full letter below: