U.S. Banking Regulator OCC Allows Federal Banks to Facilitate Stablecoin Payments And Use Blockchain Settlements
On Monday, January 4, U.S. Banking regulator - The Office of the Comptroller of the Currency (OCC) - has issued a fresh guidance that will allow all federally regulated banks to use blockchain nodes for payment settlements as well as allow stablecoin payments.
The guidance released by the OCC notes that "a national bank or federal savings association may validate, store, and record payments transactions by serving as a node on an INVN [independent node verification network]. Likewise, a bank may use INVNs and related stablecoins to carry out other permissible payment activities."
However, the banks to ensure strictly that is follows sound banking practices while complying with the law. While specifically mentioning about blockchain-based stablecoins, the regulator notes that such technologies mitigate costs by facilitating cross-border payments in a “cheaper, faster, and more efficient” manner.
The latest move from the OCC has been acknowledged by several crypto industry veterans. Many have said that this is positive step in a direction wherein regulators are now working to take the FinTech innovation to new heights.
Brian P. Brooks, Acting Comptroller of the Currency, said that OCC’s letter removes “any legal uncertainty about the authority of banks to connect to blockchains”. It makes it clear that banks can serve as blockchain nodes and also transact on those networks. At the same time, these stablecoins can be used like the traditional SWIFT networks and other similar settlement networks.
Brooks also hinted that the recent move is about leveraging the crypto industry in order to keep pace with payments innovation. “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. Some of those technologies are built and managed by bank consortia and some are based on independent node verification networks such as blockchains,” he said.
Jereme Allair, the CEO of crypto firm Circle that operates the USDC stablecoin made a series of tweets saying that this is a huge win for crypto and stablecoins. He further added that “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”.
The OCC has been initiating some crypto-friendly measures over the last year. Back in July 2020, the banking regulators allowed all regulated U.S. national banks for offering crypto custodial services to their customers.