The Office of the Comptroller of Currency (OCC) issued a statement on Monday evening stating that banks can use blockchain also known as Independent Node Verification Network (INVNs) and stablecoins.
The letter from OCC assessed the legality of the use of new technologies by National Banks and Federal Saving Associations. The federal regulator explained, “primary role of banks is to act as financial intermediaries, facilitating the flow of money and credit among different parts of the economy”. This role has evolved and taken many forms with changing financial needs, technologies, and innovations Therefore, banks can use INVNs for traditional financial operations. A bank will act as a node for recording and validating transactions.
OCC also recognized the importance of stablecoins. They combine speed and efficiency with pre-existing stability. Such advantages meet the current market demands. Thus, banks can facilitate payments in stablecoins.
The federal regulator also gave the hint towards the risk of anonymity attached with stablecoins’ transactions. Hence, the need for stablecoins’ arrangement was made clear.
Stablecoin arrangements should have the capability to obtain and verify the identity of all transacting parties, including for those using unhosted wallets.
The statement of OCC goes on to show the likely mainstreaming of cryptocurrency. The US government is starting to endorse cryptocurrency as an alternative to the traditional payment system. At the moment, it has allowed national banks to use blockchain. This step will give way to the public’s trust in crypto.
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Following the OCC’s approval, crypto markets jumped. ETH has particularly seen a price surge since the news came out. We cannot assess the long-term impact of this decision at the moment. However, Crypto is continuing the fight against less-friendly laws. Sooner or later, governments will have to concede the potential of crypto as an asset, safe haven, and a medium for exchanging value.
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