The newest crypto-friendly change from the Treasury Department office is a new set of guidance the The Office of the Comptroller of the Currency (OCC), according to Forbes.
The letter removes any legal uncertainty surrounding the authority of banks to connect to blockchains as validator nodes and thus transact stablecoin payments on behalf of customers who are increasingly demanding the speed, consistency, interoperability, and low cost associated with crypto.
Crypto on the Same Stage as SWIFT and ACH
The OCC letter stated that banks should be mindful of possible threats, including bribery, and said that by extending their regulatory procedures to meet the unique risks of crypto-currency transactions, they should defend against money laundering and terrorist financing.
The change effectively positions blockchain networks at the same stage as global financial networks such as SWIFT, ACH and FedWire.
After the letter said that U.S. financial companies are permitted to use stablecoins for payment activities, and should participate as nodes in a blockchain, cryptocurrency prices briefly rose late Monday.
The letter is summarized as follows:
This letter addresses the legal permissibility of certain payment-related activities that involve the use of new technologies, including the use of independent node verification networks (INVNs or networks) and stablecoins, to engage in and facilitate payment activities. National banks and Federal savings associations (collectively referred to as “banks”) may use new technologies, including INVNs and related stablecoins, to perform bank-permissible functions, such as payment activities.
Specifically, with regards to stablecoins, the letter states:
Likewise, a bank may use stablecoins to facilitate payment transactions for customers on an INVN, including by issuing a stablecoin, and by exchanging that stablecoin for fiat currency. In this context, stablecoins function as a mechanism of payment, in the same way that debit cards, checks, and electronically stored value (ESV) systems convey payment instructions. Banks have long used cashiers’ checks, travelers’ checks, and other bearer instruments as a means of facilitating cashless payments.
What is the OCC?
The Office of the Comptroller of the Currency (OCC) is an autonomous bureau created by the National Currency Act of 1863 within the United States Department of the Treasury and acts to charter, control, and oversee all national banks and thrift institutions and international bank branches and agencies in the United States that have been federally approved.
Brian P. Brooks, who took office in May 2020, is the acting comptroller of the currency. Brooks recently participated in a podcast, Unchained, where he discussed crypto banks.
Headquartered in Washington, D.C., it has four New York City, Chicago, Dallas and Denver district offices. It has a further 92 operational sites throughout the United States.
It is a separate bureau of the Treasury Department of the United States and is managed by the Comptroller of the Currency, named by the President with the Senate’s approval for a five-year period.
In order to protect the credibility of the federal financial structure, the OCC engages in interagency operations.
Through tracking money, asset growth, management, earnings, liquidity, market risk sensitivity, computer technology, consumer enforcement, and community reinvestment, the OCC is able to assess whether or not the bank performs in a secure and sound way, provides consumers with equal access and service, and complies with all relevant laws and regulations.
