Bullish for Bitcoin: Stablecoins get green light from US banking regulator
- The U.S. OCC has allowed banks to use stablecoins.
- The move could be a prelude to the passage of the Stable Act.
- CBDCs could be the only stablecoins in question.
The Office of the Comptroller of the Currency (OCC) has announced that it will allow US banks to use public blockchains and stablecoins as settlement infrastructure in the country’s financial system.
The OCC, part of the US Treasury Department and one of the country’s largest banking regulators, has created a new policy that will allow US banks to use Stablecoins to perform Bitcoin Trader payment activities and other bank-approved functions.
It specifically mentions that banks will be allowed to participate in what are called Independent Node Verification Networks (INVN) – in other words, public blockchains.
„Acting Comptroller of the Currency“ Brian P. Brooks commented:
„Our letter removes any legal uncertainty about the authority of banks to connect to blockchains as validation nodes and thereby make Stablecoin payments on behalf of customers who increasingly demand the speed, efficiency, interoperability and low cost associated with these products.“
What does this mean for Stablecoins?
The announcement comes at a time when Stablecoins have come under increased scrutiny from US regulators, who are demanding more clarity on the tests.
A new Stable Act has been proposed that, if passed, could spell big trouble for issuers like Tether. The bill would require stablecoin issuers to obtain a banking licence and undergo audits by the Federal Reserve.
Regarding the proposal, Brooks adds that the President’s Working Group on Financial Markets recently articulated a strong framework to usher in an era of stablecoin-based financial infrastructure.
While the actual stablecoins that will be approved have not been announced, it is highly unlikely that it will include unregulated ones like USDT. The move could encourage them to get the necessary approvals and licences to work with US banks in an official capacity.
Circle CEO and co-founder Jeremy Allaire calls the development a „big win for crypto and stablecoins“:
„The new interpretive letter establishes that banks can treat Public Chains as infrastructure similar to SWIFT, ACH and FedWire, and Stablecoins like USDC as electronic stored value. The significance of this cannot be understated.“
Bullish for crypto
Dan Held of Kraken comments that the move is bullish for Bitcoin (Go to Buy Bitcoin with Paypal Guide), which is already recovering from yesterday’s slump:
„This is huge for Bitcoin. As an immutable SoV, it’s already transacting over a trillion dollars in value a year.“
The key difference, however, will be that dollar-denominated stablecoins controlled by the central bank are likely to be the only ones allowed. This does not include decentralised assets like Bitcoin and could be limited to CBDCs, which excludes even the current stablecoins on the market.