“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 Brian P. Brooks, Acting Comptroller of the Currency. “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.”
According to the OCC, the agency letter points out the banks and savings associations can store, validate and record payment transactions by themselves, serving as nodes on an independent node verification network. Permitting this sort of activity is aimed at improving the efficiency and stability of payment activities and will allow the banks to enjoy some of the “benefits of real-time payments” along with other countries, states the OCC.
“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,” Brooks said.
"The @USOCC issued new guidance allowing federally chartered #banks & #thrifts to participate in Independent Node Verification Networks & use #stablecoins for payments. A major step forward for #digitalassets & #cryptocurrency in the U.S.! #INVN Learn more"
Further, notes the OCC, banks using the node networks and stablecoins must comply with applicable laws and employ “safe, sound, and fair banking practices.” It also encourages banks to regularly implement new, sound risk mitigation and management practices.
The letter comes after a coalition of congressional representatives last month introduced a bill to regulate the issuance of stablecoins. According to Rep. Rashida Tlaib’s office, the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act would “require any prospective issuer of a stablecoin to obtain a banking charter,” among other provisions.
Reps. Jesús “Chuy” García and Stephen Lynch, who is the chairman of the Task Force on Financial Technology, also sponsor the legislation.
“Digital currencies, whose value is permanently pegged to or stabilized against a conventional currency like the dollar, pose new regulatory challenges while also represent a growing source of the market, liquidity, and credit risk,” according to Tlaib’s office.
"It's more likely you will see an XRP integration within the independent node verification networks architecture vs BTC. Then again, with BTC's fees and 7-week confirmation times, it's probably great for the banks to use to benefit themselves."
“Getting ahead of the curve on preventing cryptocurrency providers from repeating the crimes against low- and moderate-income residents of color that traditional big banks have is—and has been—critically important,” Tlaib said. “From the OCC to the Federal Reserve to those peddling stablecoins, the protections the STABLE Act would make possible are more needed than ever amid a pandemic that will breed riskier financial decisions out of necessity because our federal government continues to fail us all by not providing adequate relief legislation.”