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US Banks Allowed To Use Stablecoins To Make Payment
All banking institutions in the United States can now use public blockchains and the stablecoins they host to make payments. They can also mine nodes of these blockchains and issue their own stablecoins.
US Banks Allowed To Use Stablecoins
This development comes from a statement by the Office of the Comptroller of the Currency (OCC). The OCC is the institution responsible for regulating and overseeing domestic banks operating in the United States.
The letter states that all banking institutions in the US are permitted to mine public blockchain nodes and use stablecoins. On the condition that the blockchain used complies with current regulations. Once this is achieved, banks can use them to store, record, validate, and settle payment transactions. With the statement, the OCC has just affirmed that public blockchains have the same status as other global financial networks like SWIFT.
The OCC refers to the licensed technology used by banks in the US as an ‘’independent node verification network’’. This is tantamount to public blockchains like Bitcoin and Ethereum that run on independent nodes. Moreover, Ethereum is the most used blockchain to host stablecoins and houses USDT and USDC.
The OCC maintains that the use of stablecoins helps reduces the cost of cross-border transactions. Besides, it is faster and efficient than traditional transactions over existing networks. Beyond payments, public blockchains have an infrastructure that enables the development of financial and commercial applications.
The Beginning Of A New Era For Stablecoins
The announcement by the OCC could herald a new era for stablecoins. To date, the most advanced stablecoin issued by a bank is the JPM coin of JPMorgan. Currently, this stablecoin is used to facilitate trading with other banks and is not used by individuals.
However, JPM Coin operates from a private blockchain fully managed by JPMorgan. It would be more attractive to banks to look to Tether’s USDT or Circle’s USDC instead. Indeed these coins already have significant visibility with the crypto community. Also, they facilitate the link between fiat currencies and crypto-assets.
It should be noted that each blockchain network will need to be approved by regulators before being deployed by banks. In conclusion, this is a major step forward in the right direction for the cryptocurrency industry.