OCC Says US Banks Can Use Blockchains and Stablecoins in Bank Payments

An interpretative letter issued by the Office of the Comptroller of the Currency (OCC) could accelerate the adoption of cryptocurrency and blockchain-based payments in the United States.

According to the OCC on Monday, regulated banks in the United States can leverage stablecoins as well as participate as nodes on blockchain networks to make, store and validate payments.

In the federal banking regulator’s interpretive letter, the OCC confirmed that federally regulated banks could participate in blockchain networks known as “independent node verification networks (INVNs)” and use stablecoins.

However, any banks that do participate as a validator on an INVN must ensure they are aware of the operational, compliance, or fraud risks when doing so. Per the interpretative letter:

"A national bank or federal savings association may validate, store, and record payments transactions by serving as a node on an INVN [independent node verification network]. Likewise, a bank may use INVNs and related stablecoins to carry out other permissible payment activities."

The OCC said INVNs and DLT technology “may be more resilient than other payment networks” due to a large number of validator nodes needed to verify transactions, creating a more tamperproof and transparent network.

Acting Comptroller of the Currency Brian Brooks, a former Coinbase executive, said in a press release that the move is about leveraging the cryptocurrency industry to keep pace, as he argues the United States has too long relied on the private sector for innovation. Brooks said:

“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."

On the announcement by the OCC, Jeremy Allaire, co-founder and CEO of Circle, tweeted, "This is a huge win for crypto and stablecoins." Circle is the operator of the USDC stablecoin, pegged 1:1 with the dollar.

Allaire added:

"We are on a path towards all major economic activity being executed on-chain. It is tremendous to see such forward thinking support from the largest regulator of national banks in the United States."

Brian Brooks Comptroller of the Cryptocurrency

A former Coinbase employee, acting Comptroller of the Currency Brian Brooks has overseen the publication of two other interpretative letters and has made a number of crypto-friendly moves.

Last month, Brooks publicly supported a letter by the President’s Working Group on Financial Markets that outlined how stablecoins should be regulated within the United States.

President Donald Trump has twice nominated Brooks to serve a full five-year term heading up the agency—however, Brooks still awaits confirmation in the Senate which appears unlikely to occur before President Trump leaves office later this month.