The Office of the Comptroller of the Currency (OCC), an U.S. Treasury Department agency, published a letter allowing banks to make payments with stablecoins. The text, published on January 4th, also gives the green light for institutions to participate in INVNs. The acronym refers to independent node verification networks.
According to the text, they can “validate, store, and record payment transactions by serving as a node in an INVN”. Besides, banks may “use INVNs and related stablecoins to perform other permitted payment activities”. However, it highlights that banks must adapt to applicable laws as well as good practices.
In another document, the OCC had already affirmed the benefits of issuing licenses to stablecoin issuers. The agency pointed out “substantial advantages in terms of efficiency, convenience and stability” in the text.
For the controlling agency, banks are ready for stablecoins operations risks
For OCC, including INVNs in the federal banking system “can increase the efficiency, effectiveness, and stability of payment activities”. In addition, it believes the move would bring “real-time payment benefits” that other countries already experience.
The authority talked again about security issues. It warned that banks should be aware of potential risks, such as operational, compliance, and fraud. “New technologies require sufficient technological expertise to ensure that banks can safely manage these risks”. But it recalled that institutions already have some experience with this kind of risks because they are similar to other electronic activities that they already perform.
Brian P. Brooks, acting OCC controller, recalled the President’s Working Group’s structure on Financial Markets. According to him, these parameters were created “to introduce an era of financial infrastructure based on stablecoin”. According to him, these parameters were made “for the introduction of an era of financial infrastructure based on stablecoin”.
‘Document removes any legal uncertainty’, says acting controller
“Our letter removes any legal uncertainty about the authority of banks to connect to blockchains as validators nodes and thus trade payments in stablecoins on behalf of their consumers”, Brooks added.
Cointelegraph recalls that Brooks has held the position since May 2020. And since then, the firm has been disseminating a series of guidelines that allow banks to be more active concerning cryptocurrencies.
Following the release of the document, the Blockchain Association commented on Twitter. For the association, “the letter states that blockchains have the same status as other global financial networks, such as SWIFT, ACH, and FedWire. It is a breakthrough for crypto because it paves the way for these networks to be a formal part of U.S. financial infrastructure”.