The US banking industry regulator, the Office of the Comptroller of the Currency (OCC), led by Brian Brooks, has issued a letter meant to interpret how banks and savings associations may use stablecoins and blockchains to validate, store and record payments.
While blockchain is the tech that serves as the transaction ledger of decentralized cryptocurrencies like Bitcoin, stablecoins are often centralized and tied to fiat money like the US dollar or gold, all in a bid to stabilize their value.
Now the OCC letter, signed by Brooks – formerly of digital currency exchange Coinbase – explains that banks can serve as nodes on independent node verification networks (INVNs) and related stablecoins. The requirement is that these banks comply with the law and good practices.
The purpose, according to the letter, is to spur the US to keep up with other countries and real-time payments systems in use there. In addition, Brooks noted that banks are allowed to issue stablecoins like debit cards, while the focus of the letter is on this technology as a way to improve competitiveness and innovation in the financial sector.
Those in the stablecoin industry are welcoming the move as a big win for stablecoins, interpreting it as the US regulator’s clear pro-cryptocurrency position. But the direction the US will take on crypto is far from clear, as activities of other offices in the US Treasury, like the Financial Crimes Enforcement Network (FinCEN) are coming up with their own proposals aimed at tighter control of the digital money industry.
Some reports see all these signals combined as regulatory uncertainty, citing also the Stablecoin Tethering and Bank Licensing (STABLE) Act that was introduced in the US House of Representatives in December.
Critics and opponents of the bill think that it will harm innovation with overregulation of stablecoins, at the same time undermining the very purpose of cryptocurrencies, meant to empower individuals, rather than giant financial institutions.
Observers say this latest move initiated by Brooks is friendly toward cryptocurrencies, but that the acting OCC head’s actions are coming up against opposition, like House Financial Services Committee Chair Maxine Waters’ December letter to Joe Biden.
It featured a recommendation to “rescind OCC guidance allowing national banks to take custody of cryptocurrencies for their clients” – largely the point of the OCC letter unveiled today.