It would seem that America is making great strides regarding the use of cryptocurrencies. Since a few days in fact, according to what has been stated by the OCC (Office of the Comptroller of the Currency), banks will be able to take advantage of new technologies, including INVNs and stablecoins, to carry out transactions.
In this article we'll talk about:
- Brian Brooks and the letter of January 4
- Stablecoins in brief
- The Interpretive Letter 1174
Introduction
Brian Brooks, a controller serving the Office of the Comptroller of the Currency (OCC), is known for his passion and strong interest in fintech, or technofinance, and blockchain technology. In fact, since taking on this important role, several regulations have been issued regarding cryptocurrency regulation.
Brian Brooks and the letter of January 4
In the last letter of January 4, Interpretive Letter 1174, the controller wanted to illustrate how banks, through the new technologies available, have the right to use INVN (independent node verification networks) and stablecoin to carry out transactions in full compliance with the laws in force in the United States.
Stablecoins in a nutshell
Compared to a "classic" currency such as Bitcoin or Ethereum, stablecoins are virtual tokens designed to maintain a constant value, which matches that of fiat currencies (e.g. the dollar). This allows to minimize the risks related to market volatility, allowing users to make fast and safe exchanges without them undergoing changes at the time of the transaction. Among the most popular are the collateralized ones, namely USD Tether (USDT), True USD (TUSD), Paxos Standard (PAX), USD Coin (USDC), and Binance USD (BUSD).
The Interpretive Letter 1174
Using stablecoins, therefore, is definitely an advantage for both banks and customers, as transactions will be greatly speeded up. For example, if you want to make a payment to a certain beneficiary, you only need to convert the fiat currency (in this case the dollar) into stablecoin (for example in USD Tether) and send them through INVN to the beneficiary. After that, the beneficiary will be able to decide whether to keep the money received as stablecoin or to convert it into fiat currency.
The letter also underlines how, in addition to representing a much faster method of payment, the use of stablecoins represents a cheaper and more efficient solution compared to traditional ones. In particular, banks were urged to use the public blockchain to make cross-border payments, minimizing the cost per transaction. Below is part of the original text in which the example we saw above is illustrated.
"For example, one entity (payer) may wish to remit a payment of U.S. dollars to a second entity (payee). Rather than using a centralized payment system, the payer converts the U.S. dollars to stablecoin and transfers the stablecoin to the payee via the INVN. The payee then converts the stablecoin back into U.S. dollars. In one common version of this fact pattern, the payment is a cross-border remittance."
Conclusions
It's mind-blowing how in the last year, especially due to the global pandemic, the entire world is gaining awareness about the cryptocurrency industry. As always, America seems to be the nation that moves first, implementing new laws and regulations far removed from those on European soil. However, the future seems to promise many innovations also for our continent, which little by little opens up to innovative technologies and new money management systems. As usual, keeping up to date with industry issues can only benefit our knowledge and our wallets.
This article was translated manually and with translator software from my original post on the ledger.it, so I'll attach the link to my the article here:
https://theledger.it/news/regolamentazioni/stablecoin-e-interpretive-letter-1174-le-banche-americane-potranno-utilizzare-la-blockchain-per-le-transazioni/
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https://www.theblockcrypto.com/linked/90025/occ-regulator-banks-stablecoins-issuance
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