Stablecoin milestone achieved! U.S. currency regulator: Federal banks can provide stablecoin payments, participate in nodes

In 2021, the cryptocurrency industry received its first piece of good news. According to the Office of the Comptroller of the Currency (OCC) in the document released on the 4th, national banks and federal savings associations will be able to settle transactions using public blockchains and stablecoins, and will be allowed to operate nodes to participate in transaction verification.

Milestone for Stablecoins

The Office of the Comptroller of the Currency (OCC), an independent bureau within the U.S. Department of the Treasury, has released a document stating that federally chartered banks that comply with regulations will be allowed to operate Independent Node Verification Networks (INVNs) to verify, store, and record stablecoin-related transactions and handle stablecoin-related payment activities.

The document also mentions stablecoin transactions, describing blockchain networks as a "faster, cheaper, more efficient" payment method that can reduce the cost of cross-border transactions. Banks meeting the standards can even issue stablecoins. The OCC's specific description is as follows:

Banks can benefit in payment processing for users with stablecoins operating on INVNs, and if willing, can issue stablecoins and provide services such as stablecoin-to-fiat currency exchanges. In this context, the utility of stablecoins is similar to payment systems, like credit cards, checks, and other transaction tools.

The OCC also emphasizes the outdated payment mechanisms of banks, stating in the document:

Banks have long used bank drafts, traveler's checks, and other anonymous instruments to facilitate non-cash payments.

USDC Founder: Great Victory

Jeremy Allaire, co-founder of Circle, the developer behind USDC, the second-largest stablecoin issuer by market capitalization, stated that this is a huge victory for cryptocurrencies and stablecoins. He expressed:

This means that banks can view public chains as infrastructure similar to SWIFT, paving the way for mainstream stablecoins to serve as payment and settlement tools in the future, helping the U.S. to dominate in adopting public chains. It's great to see the largest U.S. bank regulatory agency with this forward-thinking, really fantastic.

In fact, Brian P. Brooks, Acting Comptroller of the Currency at the OCC, is the former Chief Legal Officer of Coinbase. In a press release, he noted that this is a response to the White House Financial Markets Working Group's recommendation to regulate "multicurrency stablecoins," stating:

While other countries have developed payment systems, the U.S. still relies on startups to provide real-time payment technology. The White House Financial Markets Working Group recently proposed a regulatory framework to embrace the era of stablecoin-based financial infrastructure.

Brooks has been actively promoting the adoption of cryptocurrencies since taking office. In July last year, the OCC announced that banks and other federally regulated financial service providers can offer cryptocurrency custody services to the public without special authorization.

In a previous report, Brooks stated in a CNBC interview in December that no one will ban Bitcoin, emphasizing that more crypto-friendly regulations will come as the term of the current president, Trump, ends. This regulation release is likely what he was referring to.

Although the U.S. lags behind China in the development of CBDCs, open banks adopting stablecoins will help the U.S. catch up in the CBDC race.