US Banks now have the authority to utilize public blockchains and stablecoins for settlement infrastructure according to a letter by the Office of the Comptroller of Currency in the United States.
The letter showed that national banks and federal savings association can now participate in independent node verification networks and use stablecoin to conduct other bank-permissible functions and payment activities.
According to the Acting Comptroller of the Currency, Brian P. Brooks, the President’s Working Group on Financial Markets had recently articulated a sound framework that will usher in an era of stablecoin-based financial infrastructure, identifying risks and allowing the management of those risks in a technology agnostic manner.
He said that “the letter removes any legal uncertainty about the authority of banks to connect to blockchains as validator nodes and thereby transact stabelcoin payment on behalf of customers who are increasingly demanding the speed, efficiency, interoperability, and low cost associated with these products.”
Banks must comply with Banking and Financial Regulations
The letter clarified that banks can become block validators. Banks are also allowed to use stablecoins to carry out permissible payment activities. However, in carrying out these activities, Banks must comply with applicable law, safe and sound banking practices.
The Office of the Comptroller of Currency believes by Bank becoming validators and participating in the critically in the blockchain space will help to enhance the efficiency, effectiveness, stability of payment activities and benefits of real time payment that other nations are already enjoying.
Banks should develop sound risk management practices
While the benefits of the Banks officially adopting blockchain platforms could help boost innovation in the nation, the agency warned against compliance risks and that banks should guard against potential money laundering activities and terrorist financing as it relates to cryptocurrency.
The Office also advised banks to develop and implement new activities consistent with sound risk management practices and should align with bank’s overall business plans and strategies.
What impact will this have on the US Financial Market and System? Share your thoughts below using the comment section.
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