The U.S. Office of the Comptroller of the Currency (OCC) will allow banks to use Blockchain and Stablecoins.
The Office of the Comptroller of the Currency (OCC), issued an interpretive letter, approving U.S. banks to use Blockchain and Stablecoins for payments.
„Federally authorized banks and savings institutions may use Blockchain. Including related INVNs and Stablecoins, as payment activities“.
To better understand, the OCC is an independent office of the U.S. Department of the Treasury. It is in charge of regulating banks.
Interestingly, the new directive comes after a separate group of regulators established new guidelines for Stablecoins operators before Christmas.
The use of Blockchain and Stablecoins will be allowed
Indeed, the interpretative letter, published on Monday, indicates that banks and savings associations can now use Blockchain and Stablecoins for „permitted payment activities“.
This means, that banks can use public Blockchain, to validate, store, record and settle payment transactions. As long as they comply with existing laws.
“ Similarly, a bank can use Stablecoin, to facilitate payment transactions for customers in an independent node verification network (INVN). Even by issuing a Stablecoin“.
In addition, the letter states that: „Banks can issue Stablecoin, as they could charge debit cards or checks and exchange it for trust money“.
Of course, the OCC makes it all sound perfect: „Banks have long used cashier’s checks, traveler’s checks, and other bearer instruments as a means to facilitate cashless payments.“
There can be risks
However, the OCC warns that there are inherent cyber risks in the use of such technology:
„Banks should also be aware of the potential risks when conducting NPRI-related activities. These include operational risks, compliance risk and fraud“.
Similarly: „New technologies require sufficient technological expertise. To ensure that banks can manage these risks in a secure and robust manner“.
Opinions on the charter
In this context, Brian P. Brooks, Coinbase’s former General Counsel since May, indicated that the letter is in response to a recent statement on Stablecoin issued by the President’s Working Group on Financial Markets.
As a reminder, that report indicated that regulators may consider limitations on Stablecoins and highlighted the potential risks of one-to-one tokens.
According to Brooks: „Our letter removes any legal uncertainty about the authority of banks to connect to Blockchain as validation nodes“.
Adding: „Therefore, we will perform Stablecoin payment transactions on behalf of customers who increasingly demand the speed, efficiency and low cost associated with these products“.
On his part, Jeremy Allaire, gave a more emphatic note: „This is a great victory for the cryptomonies and the Stablecoins“.
He added: „We are on the way to the chain execution of all important economic activities. Above all, it is tremendous to see such progressive support from the largest national bank regulator in the United States.
Similarly, Justin Yashouafar, general partner of Blockhead Capital, said, „Investors are pleased to see positive regulatory news. It allows Blockchain to integrate into the traditional banking sector.
Additionally, Dan Held, from Kraken commented, „This is a great step for Bitcoin Bonanza.
Finally, the interpretation letter concludes that a national bank or a federal savings association can validate, store and record payment transactions by serving as a node in an INVN.
Also, a bank can use INVN and related Stablecoins, to carry out other permitted payment activities. Very importantly, when implementing these technologies, a bank must comply with applicable law and safe, sound and fair banking practices.
I leave with this statement from Montesquieu: „One thing is not fair just because it is law. It must be law because it is fair.