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How the OCC made Crypto Payments Mainstream

This week has been BIG for crypto, with Bitcoin up 23.9% over the past seven days, while Ether has jumped 56.8%. But the week’s biggest win may be in the form of new legislation. On Monday, the Office of the Comptroller of the Currency (OCC) issued an interpretive letter that could help make crypto payments mainstream

To put it simply, a federal regulator has said banks are free to conduct payments using stablecoins like USDT and DAI.

The OCC is an independent branch of the US Treasury, which regulates national banks and federal savings associations. Interestingly, Brian Brooks, who formerly led Coinbase’s legal team, has been the Acting Comptroller of the Currency since May 2020. 

Interpretive letters, like the one issued this week, offer a blueprint for banks to follow. The letter makes this clear, noting that, as financial intermediaries, banks face competition to move funds faster. In the OCC’s view, blockchain technology, or “independent node verification networks (INVNs)” are the newest advancement in fund transfer.

The letter also makes it clear that a bank may issue stablecoins and exchange them for fiat. 

The Blockchain Association noted:

“The letter states that blockchains have the same status as other global financial networks, such as SWIFT, ACH, and FedWire.

What does this mean for cryptocurrency?

“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…”

Acting Comptroller of the Currency, Brian P. Brooks.

The OCC’s letter is a sign that the US financial system may be ready to concede to open blockchains. Instead of developing a central-bank digital currency from the ground up, the next best step may be to approve one on a system that already exists.

Jeremy Allaire, co-founder and CEO of Circle, (which operates the USDC stablecoin) took to Twitter with his breakdown on what this means for the future:

(These are just two in a series of ten tweets. We highly recommend reading all of them.)

The news may not all be as rosy as it seems.

The OCC may choose to follow the recommendations of FinCEN, another bureau of the US Treasury. FinCEN or the Financial Crimes Enforcement Network proposed that exchanges report cryptocurrency transactions if they meet a certain dollar threshold.

This would, in effect add a second layer over the blockchain, hampering any benefits it would provide. In the words of Reddit user /u/chuck_portis, “they’re basically taking a car and tying a horse in front of it to make sure it stays under the speed limit.”


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