OCC approves stablecoin payments, opens new avenues for digital assets

OCC approves stablecoin payments, opens new avenues for digital assets

A new interpretive letter from the Office of the Comptroller of the Currency (OCC) providing green signal to the usage of the cryptocurrency, stablecoin, for bank payments is set to open new pathways for the mainstream finance to conduct live testing of digital assets in a relatively secured corner of the market. Apparently, this decision is a consent what some perceive to be the “training wheels” that will allow the development of compliance controls for the expansive application of digital currencies over the foreseeable future.

It has been reported that banks have already been using stablecoin, whose value is linked directly with assets such as traded commodities or the U.S. dollar, limitedly. Further, they are anticipated to expand their operations for building expertise in areas including cyber security and anti-money laundering that raises serious concerns. Such experiences could act as compliance models for users and exchanges.

As per credible sources, the OCC action has been considered as a major event for the cryptocurrency marketplace and the banking sector. This also helped increase the prices of bitcoin to record levels last week. However, the OCC’s decision does not pertain directly to bitcoin which as opposed to stablecoin is not associated to an asset.

Commenting on the matter, OCC stated that banks may enter independent node verification networks (INVNs). For the record, INVNs, also called as blockchain networks, are shared electronic databases which store same information on multiple computers. OCC also added that the “distributed ledgers” used for recording cryptocurrency transactions are a type of INVN, in which participants authenticate the transactions, save transaction history and broadcast data to other nodes.

Meanwhile, Acting Comptroller Brian Brooks has stated that the interpretive letter eliminates legal uncertainties regarding the authority of banks for connecting with blockchains as validator nodes thereby transacting stablecoin payments on behalf of customers who are demanding efficiency, speed, interoperability and lower cost associated with these products.

Source credit: https://www.reuters.com/article/idUSKBN29I2XZ