US federal regulator says banks can conduct payments using stablecoins

6 Jan, 2021 02:44
source: Singularity Financial

Singularity Financial Hong Kong January 6, 2021 – Federally regulated banks can use stablecoins to conduct payments and other activities, the Office of the Comptroller of the Currency (OCC) said Monday by publishing an interpretive letter addressing whether national banks and federal savings associations could participate in independent node verification networks (INVNs, otherwise known as blockchain networks) or use stablecoins.

In a statement on its website, the agency said that federally chartered banks and thrifts can validate, store and record payments by serving as a node on an INVN. Financial institutions can also use INVNs and stablecoins for permissible payment transactions.

Any banks that do participate in an INVN must be aware of the operational, compliance or fraud risks when doing so, an OCC press release warned. Still, the OCC said INVNs “may be more resilient than other payment networks” due to the large number of nodes needed to verify transactions, which can in turn limit tampering.

“While governments in other countries have built real-time payments systems, the United States has relied on our innovation sector to deliver real-time payments technologies. Some of those technologies are built and managed by bank consortia and some are based on independent node verification networks such as blockchains,” said Acting Comptroller of the Currency Brian P. Brooks.

“The President’s Working Group on Financial Markets recently articulated a strong framework for ushering in an era of stablecoin-based financial infrastructure, identifying important risks while allowing those risks to be managed in a technology-agnostic way. 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.” Brian added.