The U.S.'s top banking regulator has announced that banks and savings associations can now use public blockchains and stabilizecoins to pay for transactions. Experts agree that this is a good move for bitcoin, and it should not be underestimated.
Banks can use public blockchains and stablecoins
On Monday, the Office of the Comptroller of the Currency published an interpretive note "clarifying national bank's and federal savings association's authority to participate in independent verification networks (INVN), and use stablecoins for payment activities to conduct other bank-permissible tasks." It oversees approximately 1,200 federal savings and national banks. They also supervise federal branches of foreign banks that handle about 70% of U.S. banking business.
"While other countries have developed real-time payment systems, the United States has relied upon our innovation sector to deliver such technologies," said Acting Comptroller for the Currency Brian Brooks. "Some of these technologies are built by bank consortia, while others are based upon independent node verification network such as blockchains.
He said, "The President’s Working Group on Financial Markets recently articulated an effective framework for ushering into an era stablecoin-based Financial Infrastructure."
This letter clarifies the legality of banks being able to connect to the blockchains as validator nosdes to transact stablecoin payment transactions on behalf of customers. Customers are demanding more speed, efficiency, interoperability and low costs associated with these products.
OCC letter states that a national bank or federal savings associations can validate, store, record and record payments transactions by serving a node in an INVN. In addition, banks may use INVNs, stablecoins, and other permissible payment activity. A bank must adhere to applicable law when deploying these technologies.
This clarification is widely welcomed by the crypto community. Dan Held, the growth leader at Kraken cryptocurrency exchange, said: "The OCC allows US banks to use public Blockchains and stablecoins in the US financial systems... This is hugely important for Bitcoin. It is an immutable SOV that has already settled more than a trillion dollars in value each year.
Circle CEO Jeremy Allaire stated that this was a major win for stablecoins and crypto.
This interpretive letter clarifies that banks can consider public chains infrastructure like SWIFT, ACH, Fedwire and USDC, as well as stablecoins such as USDC, as electronic stored values. This is a significant development.
He stated that "decentralized, permissionless and open-source software is literally becoming the foundation not only for the US financial system but also for the global economy." It also opens the door for more financial institutions that are regulated to run blockchain nodes and even become validators