Comptroller of the Currency: Federally regulated banks can use stablecoins to conduct payments and other activities

2021 has been an open year for cryptocurrencies. In it, in an interpretive letter published late Monday, the Office of the Comptroller of the Currency (OCC) states that federally regulated banks can use stablecoins to make payments and other activities.

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Read the full letter here

Comptroller of the Currency: Federally regulated banks can use stablecoins to conduct payments and other activities

The federal banking regulator published 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. The letter said that these financial institutions can participate as nodes on a blockchain and store or validate payments.

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.

The letter indicates that banks and savings associations can now run crypto nodes and utilize associated stablecoins for permissible payment activities. This means banks can use public blockchains to validate, store, record, and settle payment transactions as long as they’re compliant with existing laws.

It also specifically mentions the use of stablecoins for transactions, saying blockchain networks can mitigate costs for cross-border transactions as a cheaper, faster, and more efficient means of payment. For that reason, it’s empowering banks to utilize blockchains and their stablecoins for converting to and from fiat during remittances — and even issue stablecoins if they so choose.

The regulator noted:

“Likewise, a bank may use stablecoins to facilitate payment transactions for customers on an independent node verification network, including by issuing a stablecoin, and by exchanging that stablecoin for fiat currency.”

Last fall, the OCC said that federally chartered banks can hold reserve funds for fiat-backed stablecoin issuers.

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