The top banking regulator in the US has announced that national banks and savings banks 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 Auditor (OCC) published an interpretative letter on Monday clarifying the powers that national banks and federal savings banks have to participate in Independent Node Verification Networks (INVN) and to use stablecoins for payment activities and other bank-approved amounts. “The OCC oversees nearly 1,200 national banks, federal savings banks, and branches of foreign banks, which conduct approximately 70% of all banking in the US
“While governments in other countries have built real-time payment systems, the US has relied on our innovation sector to provide real-time payment technology,” said Brian Brooks, assistant auditor for the currency. “Some of these technologies are developed and managed by banking consortia, while others are based on independent node verification networks such as blockchains.”
He continued: “The President’s Working Group on Financial Markets recently formulated a strong framework for the dawn of an era of stable, coin-based financial infrastructure.
Our letter removes any legal uncertainty about the authority of banks to connect to blockchains as validation nodes and thereby make stable coin payments for customers who increasingly demand the speed, efficiency, interoperability and low cost of these products.
The OCC letter comes to the conclusion that “a national bank or a federal savings association can validate, save and record payment transactions by acting as a node in an INVN”. Additionally, “a bank may use INVNs and associated stablecoins to conduct other legitimate payment activities. When using these technologies, a bank must comply with applicable laws and comply with safe, sound and fair banking practices. “
The crypto community very much welcomes this clarification from the OCC. Dan Held, growth chairman at Cryptocurrency Exchange Kraken, commented: “With the OCC, US banks can use public blockchains and stablecoins as a settlement infrastructure in the US financial system. This is enormous for Bitcoin. As an immutable SoV, it’s already valued at over $ 1 trillion a year. “
Jeremy Allaire, CEO of Circle, stated, “This is a huge win for crypto and stablecoins.
The new interpretation letter states that banks can treat public chains as an infrastructure similar to SWIFT, ACH and Fedwire and stable coins like USDC as electronically stored value. The importance of this cannot be underestimated.
“Decentralized, permissionless, open source and internet-mediated software is literally becoming the foundation not only of the US financial system but also of the world economy,” he said. “It also creates the conditions for more regulated financial institutions to operate blockchain nodes and even become validators.”
What do you think of this new OCC clarification? Let us know in the comments below.
Photo credit: Shutterstock, Pixabay, Wiki Commons
Disclaimer of liability: This article is for informational purposes only. It is not a direct offer or an invitation to make an offer to buy or sell, or a recommendation or approval of products, services or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author are directly or indirectly responsible for any damage or loss caused or allegedly caused by or in connection with the use or reliance on any content, goods or services mentioned in this article.