National banks and licensed US savings associations will be able to participate as nodes in public blockchains such as Bitcoin and Ethereum and process payments with stablecoins, according to an interpretive letter published Monday night by the Comptroller’s Office of the Currency (OCC) of the nation.
In its publication, the US regulator points out that federal financial institutions are now authorized to use new technologies, such as “independent node verification networks (INVN or blockchain networks) and stablecoins, to participate and facilitate payment activities.” In this way allows banks to participate as nodes in a public blockchain and open to validate, store, record and settle payment transactions, provided they comply with existing laws.
In the document, the OCC points out that, with the interaction in blockchains, financial institutions will be able to mitigate the costs of remittances, and process them in a “cheaper, faster and more efficient” way. For this, they can use stablecoins such as Tether, TrueUSD or USD Coin, which have a 1: 1 parity with the dollar.
“INVNs can improve the efficiency, effectiveness and stability of the provision of payments. For example, they can be more resilient than other payment networks due to their decentralized nature. Rather than relying on a single entity (or a small number of parties) to verify payments, INVNs allow a comparatively large number of nodes to verify transactions reliably. In a nutshell, these networks can be more resilient because they do not have a single point of failure and can continue to operate even if multiple nodes go down and can be more reliable due to their consensus mechanisms requiring more nodes to validate the underlying transactions. “
Interpretive letter from the Office of the Comptroller of the United States Currency.
Blockchain ecosystem celebrates OCC letter
Various members of the cryptocurrency ecosystem reacted on Twitter to the OCC letter. In this regard, Jeremy Allaire, CEO of Circle highlighted the importance of the document, noting that with his authorization the US regulator is granting blockchains the same status as other global networks, such as SWIFT, ACH and FedWire in the traditional financial system.
“Decentralized, permissionless, open source, Internet-mediated software is literally becoming the foundation not only of the US financial system, but also of the global economy. We are on the way for the main economic activities to be carried out in a chain ”.
Jeremy Allaire, CEO of Circle.
For her part, Kristin Smith, executive director of the Blockchain Association of the United States, pointed out that “the interpretive letter of the OCC shows that there are people in government who really understand that cryptocurrency networks are the basis of a payment system of Next Generation”.
The OCC announcement came just at the time when closed the window for receiving public comments on the bill that obliges financial institutions to submit reports, keep records and verify the identity of clients in relation to operations involving cryptocurrencies, above certain thresholds. This proposed regulation, presented by another financial regulator, FinCEN, has generated controversy in the ecosystem.
As CriptoNoticias published in July last year, the OCC authorized banks to offer the custody service for bitcoin. At the time, the regulator led by former Coinbase executive Brian Brooks recognized that as financial markets become increasingly digital, there is a growing need for it to banks and other service providers reap the benefits offered by technology.
This same media reported in September when the OCC issued an authorization for national banks, and savings associations, to hold deposits or reserves to issuers of stablecoins.