The largest banking regulator in the United States announced that the nation’s national banks and savings societies can use public block chains and stablecoins for payment activities. Experts say this is beneficial for Bitcoin, and its importance should not be underestimated.
Banks can use public blockchains and stablecoins
The Office of the Comptroller of the Currency (OCC) published an explanatory letter on Monday, “Clarifying the National Banking Authority and Federal Savings Associations to participate in Independent Contract Verification Networks (INVNs) and to use stablecoins to conduct payment activities and other permitted bank functions.” The OCC oversees nearly 1,200 national banks, federal savings associations, and federal branches of foreign banks that manage nearly 70% of all banking in the United States.
“While governments in other countries have established real-time payment systems, the United States has relied on our innovation sector to deliver real-time payment technologies,” said Acting Currencies Comptroller Brian Brooks. “Some of these technologies are built and managed by banking federations, and some rely on independent node verification networks such as the blockchain.”
He continued, “The President’s Working Group on Financial Markets has recently developed a strong framework to usher in the era of stable financial infrastructure based on digital currencies,” explaining:
Our letter removes any legal uncertainty over the authority of banks to connect to blockchain networks as audited contract and thus handle stable coin payments on behalf of clients 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 may verify, store, and record payment transactions by acting as a node on INVN.” In addition, “the bank may use INVNs and related stablecoins to carry out other permitted payment activities. When deploying these technologies, the bank must comply with applicable law and safe, sound and fair banking practices.”
The crypto community widely welcomes this OCC clarification. Dan Held, Growth Leader at Kraken, commented, “The OCC will allow US banks to use public blockchains and stablecoins as settlement infrastructure in the US financial system … This is huge for Bitcoin. As a ground constant, it has already settled on what More than a trillion dollars in value annually. “
“This is a huge victory for stable and cryptocurrencies,” explained Jeremy Alayer, CEO of Circle:
The new explanatory letter states that banks can treat public chains as infrastructure similar to SWIFT, ACH, Fedwire, and stablecoins such as USDC as electronic stored value. This cannot be underestimated.
“The decentralized, unlicensed, open source software available over the Internet has become the basis not only of the US financial system but of the global economy,” he said. “It also paves the way for more structured financial institutions to operate the blockchain nodes, and even become validators.”
What do you think of this new OCC clarification? Let us know in the comments section below.
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