The Office of the Comptroller of the Currency (OCC) supports the burgeoning world of cryptocurrencies and digital assets with a recent letter outlining how federally chartered banks can incorporate stable coins into their business. The most recent letter, dated January 4, 2021, clarifies that U.S. banks can use stable coins for payments (both internal to the bank and external to other parties). Additionally, they can use them to participate as nodes on “independent node verification networks” (INVNs), also known as blockchain networks. This letter is the latest in a line of favorable rulings from the U.S. bank regulator, an agenda that has been pushed by Brian Brooks, the former Acting Comptroller of the Currency. Brooks, who also lists former general counsel of the cryptocurrency exchange Coinbase on his resume, stepped down on January 14, 2021, likely to make way for President-elect Joe Biden’s head of the agency.
While it remains to be seen whether OCC and other federal regulators will continue to support the crypto-favorable agenda championed by Brooks, this latest regulation does open the door immediately for banks and savings associations to take advantage of stable coins as an alternative payment rail. However, the question remains, are stable coins the way of the future or a fad? In this blog, we examine the potential benefits and risks of the nascent technology and posit how organizations can leverage stable coins to improve their businesses.