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Speculations From the OCC Allowing Banks to Handle Stablecoin Payments

The Office of the Comptroller of the Currency (OCC) recently approved the use of stablecoins for banks to process financial transactions. However, issues arose from the new OCC guidelines on what this could mean for the entire crypto community and stablecoins, even in the future.

Speculations on the New Guidelines

The announcement led to ETH rising by nearly 12% with Ethereum’s dominance as a stable payment processing protocol, and Bitcoin up 5%. The two leading cryptocurrencies almost wholly pulled from their Sunday evening losses.

Tanvi Ratna, a policy advisor, gave speculations on what the OCC guidelines could mean to the cryptocurrency space in a Twitter thread.


She said that most people have caught on that stablecoins getting linked to banks will make them more regulated and justify full AML/KYC disclosures. It will be mandatory anywhere at any time, not just in the United States.

The OCC recently offered banksthe ability to provide services to stablecoin suppliers. It could have significant consequences for the entire crypto market as stablecoins are the primary liquidity tool for most cryptocurrency trading activities worldwide. Bitcoin price is hence affected as its rise pump is often associated with whale wallet movement.

The regulation effectively opens the door to many Wall Street stablecoins. Most banks want to manage their stable currency, manage their reserves, and have additional income sources. There will be a steady wave of coins created by big banks and fintech to gain dominance and top the competition with existing market share and revenue-generating network effects. Blockchain can hence become a less free market.

The OCC Letter

The acting OCC Supervisory Brian P. Brooks said the President’s Working Group on Financial Markets had recently formulated a robust framework to usher in an era of reliable currency-based financial infrastructure.

The letter applies to national banks and federal savings banks that participate as nodes in the blockchain and store or validate payments in local digital assets or stable coins. It removes the legal uncertainty about the bank’s authority to connect the blockchain as a validation node and thus performs stablecoin transactions for customers who increasingly need the speed, efficiency, interoperability, and low cost of these products.

The OCC letter contradicts a bill introduced at the last session of the U.S. Congress, according to which stable coin issuers must receive a bank certificate. This aggressive anti-stability proposal has resulted in donations of hundreds of thousands of dollars sent to the leading cryptocurrency advocacy group, Coin Center.

In mid-December, the finance department proposed a comprehensive customer knowledge (KYC) rule for U.S. cryptocurrency users who want to move their holdings from the exchange to their wallets.

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