Banks Can Use Stablecoin As the Payment Method in the USA
On Jan 05, 2021
The Office of the Comptroller of the Currency allowed banks to use stablecoins in transactions. It can help stablecoins to develop further.
Stablecoins are one of the cryptocurrencies that peg their value to some fiat currencies. It can be USD, EURO, or YEN. These stablecoins are useful when other cryptocurrencies are too much volatile. The stability of the stablecoin is the advantage of them. This advantage attracts many organizations to use it as a medium of payment.
On 4th January, The Office of the Comptroller of the Currency (OCC) approved the usage of stablecoins during transactions. According to the press release, banks can participate in independent node verification networks (INVN) to verify and store the transactions. This process functions the same way blockchains do for cryptocurrencies. They need to comply with applicable law and safe, sound, and fair banking practices to execute those transactions.
Acting Comptroller of the Currency Brian P. Brooks:
“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.”
“The President’s Working Group on Financial Markets recently articulated a strong framework for ushering in an era of stablecoin-based financial infrastructure, identifying important risks while allowing those risks to be managed in a technology-agnostic way.”
However, there was not any other information about other cryptocurrencies such as Bitcoin. It seems that stablecoins are more favorable for OCC due to potential risks other digital currencies have.
The other reason for utilizing cryptocurrencies for bank transactions is the speed of the blockchain. The modern world required modern solutions for traditional operations. Using INVN will help banks to increase the speed, reliability, efficiency, and effectiveness. Blockchain-like technology will lower the errors and serve as a more secure and fast tool for the transaction.
Although cryptocurrencies offer some advantages, OCC recommends banks to be careful while using stablecoins. New technologies need some expert employees to control and manage them. Also, banks need to be cautious with money laundering and financing terrorist activities.
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