The Office of the Comptroller of the Currency (OCC) has issued an interpretive letter allowing federally chartered banks to use stablecoins, or cryptocurrencies with relatively stable prices, for standard banking transactions like payment activities. The letter further states that banks can participate in validating stablecoin transactions or Independent Node Verification Networks (INVN) in a blockchain.
"INVNs and related stablecoins represent new technological means of carrying out bank-permissible payment activities," the agency stated in its letter, adding that banks have long used other forms of cashless payments, such as cashiers' checks and travelers' checks.Key Takeaways The OCC has published an interpretive letter that allows banks to use stablecoins for banking-related services. The letter is a regulatory step forward for stablecoins and could open up new markets for cryptocurrency.
The OCC's letter was released on the same day as the end of a comment period for a Financial Crimes Enforcement Network (FinCEN) proposal requiring exchanges to maintain records for transactions involving self-hosted wallets. That rule could multiply costs and bureaucratic overhead for crypto businesses.
The latest missive from the OCC could open new markets and herald an era of speedy settlement time for payment transactions. Some banks, such as JPMorgan Chase & Co. (JPM), already use digital coins to settle transactions for institutional clients. Payment processor Visa Inc. (V) has also partnered with Circle Internet Financial, issuer of the USDC stablecoin, to make it available to merchants for payment transactions on its platform.A Regulatory Step Forward
While stablecoins have gained popularity in the past couple of years, their regulatory status has mostly remained unclear. Under acting commissioner Brian Brooks, who was previously chief legal officer at crypto exchange Coinbase, the OCC has moved quickly ...