According to the latest reports, the Office of the Comptroller of the Currency (OCC) will let US banks use public blockchains and stablecoins as a form of settlement infrastructure in the country’s financial system.
The OCC is a part of the US Treasury and ranks among the biggest banking regulators in the country. It has now created new guidance to enable American banks to use stablecoins to conduct various payment activities and many other bank-permissible functions.
It particularly highlighted that US banks would be authorized to participate in what it calls independent node verification networks (INVN); in other words, the public blockchains. Brian P. Brooks, the acting comptroller of the currency said:
“Our letter removes any legal uncertainty about the authority of banks to connect to blockchains as validator nodes and thereby transact stablecoin payments on behalf of customers who are increasingly demanding the speed, efficiency, interoperability, and low cost associated with these products.”
Are Stablecoins Off The Hook?
This announcement comes at a time when the stablecoin space has come under massive scrutiny from the US regulators who want more clarification on audits for them.
Notably, a new Stable Act has been proposed. If it is passed, it may cause big problems for the issuers including Tether. This bill would need stablecoin issuers to get a chartered banking license and submit entirely to audits executed by the Federal Reserve.
While referring to this proposal, Brooks said that the President’s Working Group on Financial Markets recently created a major framework for ushering in an era of well-developed stablecoin-based financial infrastructure.
The list of stablecoins to be permitted to operate was not disclosed although it is quite unlikely that it will feature the unregulated ones like USDT. This move may encourage these stablecoins to get the needed permits and licenses to cooperate with US banks in an official capacity.
Jeremy Allaire, the co-founder and CEO of Circle, termed it as a ‘huge win for crypto and stablecoins.’
“The new interpretive letter establishes that banks can treat public chains as infrastructure similar to SWIFT, ACH and FedWire, and stablecoins like USDC as electronic stored value. The significance of this can’t be understated.”
Is It Bullish For Crypto?
“This is huge for Bitcoin. As an immutable SoV, it already settles over a trillion dollars’ worth of value annually.”
Nonetheless, the main difference will be that the dollar-backed stablecoins are controlled by the central bank and they are likely to be the only ones permitted. Interestingly, that does not include the decentralized assets like Bitcoin, and may well be restricted to only the central bank digital currencies. That may exclude the current batch of stablecoins on the market.