2021 has already been touted as the year for Bitcoin. But on a more positive note for the collective industry, in an interpretive letter, a federal banking regulator on Monday stated that the U.S. financial institutions are allowed to use stablecoins for payment activities, and can also participate as nodes in a blockchain.
According to the official release, the Office of the Comptroller of the Currency [OCC] which happens to be the US Treasury’s independent bureau, published a letter in which it clarified that the banks will be able to use stablecoins to execute transactions given that it conforms with the law and sound banking practices.
While acknowledging that if independent node verification networks [INVNs] and related stablecoins represent new technological means of performing bank-permissible payment activities., the interpretive letter issued by the OCC concluded,
“..that a bank may validate, store, and record payments transactions by serving as a node on an INVN. Likewise, a bank may use INVNs and related stablecoins to carry out other permissible payment activities. A bank must conduct these activities consistent with applicable law and safe and sound banking practices.”
The latest news comes nearly two weeks after top U.S. financial regulators reportedly warned firms behind the stablecoin market to tighten protections against money laundering.
Stablecoins have been mired in controversy ever since social media giant, Facebook’s Libra came into the picture.
Hence, the latest move was crucial to the ecosystem as aims to offer blockchain networks a level playing with traditional counterparts such as SWIFT, ACH, and FedWire. This step was further crucial because it can potentially the lobbyist group The Blockchain Association said in a tweet, calling it “a giant advance for crypto because it lay the foundation for these networks to be a formal part of the country’s financial infrastructure.
Jeremy Allaire, CEO of Circle went on to say that this was a huge win for the stablecoin sector. The exec also stated that this was a crucial step that could essentially set the stage for the use of leading dollar digital currencies such as USDC as a mainstream payment medium for all forms of payments and settlement. He went on to add,