The OCC will allow US banks to use public blockchains and stablecoins to settle financial transactions

The Office of the Comptroller of the Currency has clarified rules for US banks regarding the use of public blockchains and stablecoins, allowing them to run nodes and use stablecoins for payment activities and other bank functions.


In a press release publish today, the OCC stated that: “The agency letter concludes a national bank or federal savings association may validate, store, and record payments transactions by serving as a node on an Independent Node Validating Network (INVN). Likewise, a bank may use INVNs and related stablecoins to carry out other permissible payment activities. In deploying these technologies, a bank must comply with applicable law and safe, sound, and fair banking practices.”

An INVN is another word for a public blockchain which is composed of independent nodes that verify the transactions within the blockchain. This letter clarifies that banks are allowed to run nodes and use public blockchain networks and stablecoins.

The press release continues: “Engaging in INVN within the federal banking system may enhance the efficiency, effectiveness, and stability of payments activities and achieve the benefits of real-time payments already enjoyed in other countries. For example, such activities may be more resilient than other payment networks because of the decentralized nature of INVNs.”

The OCC believes that the use of these networks will enhance the banking system by increasing efficiency within the banking system. Blockchain networks settle much faster and have lower costs than the traditional banking system.

This letter also suggests that banks are well suited for dealing with the risks of blockchain technology, as they are already experienced in providing electronic custody, certification, and data processing.

Acting Comptroller of the Currency Brian P. Brooks stated: “Our letter removes any legal uncertainty about the authority of banks to connect to blockchains as validator nodes and thereby transact stablecoin payments on behalf of customers who are increasingly demanding the speed, efficiency, interoperability, and low cost associated with these products.”

This letter will likely usher in a new era of US banks providing cryptocurrency and blockchain related banking services which may include node operation, digital custody, payments, stablecoin issuance, and other services. Many institutions will feel more comfortable working with well established and regulated banks than with fairly new crypto startups.

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