OCC Says Federally Chartered Banks May Participate In Blockchain Networks
After recently allowing them to offer cryptocurrency custody services for customers and engage in certain stablecoin activities, the Office of the Comptroller of the Currency (OCC) has now clarified in a letter that federally chartered banks and thrifts may “participate in independent node verification networks (INVN) and use stablecoins to conduct payment activities.”
“Our letter removes any legal uncertainty about the authority of banks to connect to blockchains as validator nodes and thereby transact stablecoin payments on behalf of customers who are increasingly demanding the speed, efficiency, interoperability, and low cost associated with these products,” said Acting Comptroller of the Currency Brian Brooks.
The OCC had noted in July last year that providing cryptocurrency custody services, including holding unique cryptographic keys associated with cryptocurrency, is a modern form of traditional bank activity related to custody services.
Later in September, the OCC said federally chartered banks and thrifts ‘may engage in certain stablecoin activities.’ They may hold stablecoin “reserves” as a service to bank customers, in situations where the coins are held in hosted wallets.
The OCC is a federal agency that oversees the execution of laws relating to national banks. It charters, regulates, and supervises national banks and federal branches and agencies of foreign banks in the U.S.
With banks and financial institutions increasingly getting digitized, the OCC recognizes that there will be an increasing need for banks and other service providers to leverage new technology and innovative ways to serve their customers’ needs.
The agency has now concluded that a national bank or federal savings association may validate, store, and record payments transactions by serving as a node on an INVN. Likewise, a bank may use INVNs and related stablecoins to carry out other permissible payment activities.
The OCC noted that engaging in INVN within the federal banking system may enhance the efficiency, effectiveness, and stability of payments activities and achieve the benefits of real-time payments already enjoyed in other countries.
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