The Federal Banking Regulator released an interpretive letter on whether national banks and federal savings associations could engage in independent node verification networks (INVNs, better known as blockchain networks) or use stablecoins. The letter indicated that these financial institutions will participate as nodes on the blockchain and store or verify payments.
Any bank that invests in the INVN must be mindful of financial, regulatory or fraud threats, as warned by the OCC press release.
Even, the OCC stated that INVNs “may be more resilient than other payment networks” due to the vast number of nodes required to validate transactions, which in turn may restrict tampering.
Kristin Smith, executive director of the Blockchain Association, said on Twitter that “the letter states that blockchains have the same status as other global financial networks, such as SWIFT, ACH, and FedWire.”
Brian Brooks, the Acting Currency Controller, said in a statement that while other nations have developed real-time payment networks, the U.S. “has relied on” the private sector to build such innovations, ostensibly promoting the use of cryptocurrencies – especially stablecoins – as an alternative to other real-time payment systems.
Brooks has supervised the release of two other interpretive letters and a number of other crypto-friendly moves during his tenure running the department, including a letter advising federal banks that they should offer services to stablecoin issuers and store deposits for stablecoins.
Last month, Brooks announced his support of a letter by the President’s Working Group on Financial Markets that outlined how stablecoins should be regulated within the U.S.
President Donald Trump has twice nominated Brooks to serve a full five-year term heading up the agency, including earlier this week. However, it’s unclear whether the U.S. Senate will schedule a confirmation vote.As of press time, it does not appear likely it will do so before President-elect Joe Biden takes office on Jan. 20.
The interpretive letter of Monday also expires on the same day as the public consultation period for the new Financial Crime Compliance Network (FinCEN) law. The contentious regulation only had a 15-day comment period and was officially led by Treasury Secretary Steven Mnuchin, who appointed Brooks to the OCC in early 2020.
“[Monday’s OCC letter] goes to show that there’s not an all-out assault on cryptocurrencies, that there are bright spots in the government that realize that crypto networks are going to be the foundation of future payments systems and other financial services applications, so we welcome this type of interpretive guidance,” Smith said.
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