Federally Chartered Banks and Thrifts May Participate in Independent Node Verification Networks and Use Stablecoins for Payment Activities
Yesterday, the Office of the Comptroller of the Currency (OCC) released a letter stating that national banks’ and federal savings associations’ had the authority to participate in independent node verification networks (INVN). The letter also clarifies that these entities can use stablecoins to conduct payment activities and other bank-permissible functions. The publication may indicate that bitcoin acceptance is on the horizon. The OCC letter sought to remove any uncertainty about the authority of banks to connect to blockchains, allowing their customers to utilize the cryptocurrency to a higher potential.
The letter also clears up misconceptions about whether banks can transact stablecoin payments on behalf of customers, who seek the benefits of blockchain such as interoperability, speed, and efficiency. Allowing the federal banking system to engage in INVN and stablecoin transactions may enhance the stability of payments activities and online banking, as well as create a more resilient banking experience. INVN limits tampering because the information is only added to the network after consensus is reached among the nodes validating the information, promoting security. However, banks need to practice strong cybersecurity policies and be aware of the potential risks of INVN activities such as fraud, compliance risk, and operational risks.