05 Jan 2021 Samantha McLauren
US Treasury To Make Blockchains And Stablecoins Eligible For Bank Payments
The United States’ Treasury and the banks regulating bureau – The Office of the Comptroller of the Currency (OCC), issued an interpretive letter, highlighting the use of blockchain-based products and stablecoins for payments.
In the letter, dubbed “OCC Chief Counsel’s Interpretation on National Bank and Federal Savings Association Authority to Use Independent Node Verification Networks and Stablecoins for Payment Activities”, the bank regulator addresses the use of independent node verification networks (INVNs) and stablecoins to facilitate payment activities.
According to the letter, "a national bank or federal savings association may validate, store, and record payments transactions by serving as a node on an INVN”, as long as the transaction is law compliant.
Former Coinbase executive, now Acting Comptroller of the Currency, Brian Brooks noted that the move would leverage new payment technologies to keep pace with the world of cryptocurrencies.
“While governments in other countries have built real-time payments systems, the United States has relied on our innovation sector to deliver real-time payments technologies," Brooks added.
The OCC also indicated that as financial intermediaries, banking institutions face fierce competition to settle transactions faster. INVNs – blockchains, and DLT, are an efficient and fast way of moving funds. The letter suggested the use of stablecoins as an issuance medium for banks, just like debit cards or checks, and they will be exchangeable for fiat currencies. "Banks have long used cashiers’ checks, travelers’ checks, and other bearer instruments as a means of facilitating cashless payments," the letter reads.
The crypto community quickly responded to the news, with Circle co-founder Jeremy Allaire stating that "this is a huge win for crypto and stablecoins."
"We are on a path towards all major economic activity being executed on-chain. It is tremendous to see such forward-thinking support from the largest regulator of national banks in the United States," Allaire added.
However, the pro-crypto stance of the OCC comes amid regulatory uncertainty across the crypto industry, as another branch of the US Treasury – The Financial Crimes Enforcement Network (FinCEN), proposed new rules that oblige financial services providers, banks, and crypto exchanges to report crypto transactions to private wallets if they exceed a certain threshold.
Furthermore, in December 2020, the Stablecoin Tethering and Bank Licensing (STABLE) Act brought another portion of regulatory pressure, as the bill, introduced by Rep. Rashida Tlaib in the US House of Representatives aims to put another set of regulations on stablecoin issuers like banks. Rep Tlaib, joined by other representatives, even questioned Brooks’ decisions as he allegedly placed "excessive focus on crypto assets and crypto-related financial services."Blockchain Cryptocurrency cryptocurrencies currency cryptocurrency news Stablecoin us economy Banks USA US Stablecoins Payments