The new OCC regulations are a double-edged sword for the crypto community as Avanti Bank executive Caitlin Long said. The author of the STABLE act Rohan Grey says that the issues are “no more nuanced than just traditional banks vs crypto” but let’s find out some more in our cryptocurrency news.
A week ago, the Office of the Comptroller of the Currency which is a branch of the US Treasury, issued a letter stating that the national banks can now use blockchains and stabelcoins for payment services. The news was crowded since then especially now after Bitcoin’s rise and fall, as well as the political revolt in the nation’s capital and the tech revolt on Social media. The implications could be far-reaching. The banks with a national charter said that the OCC could use blockchains and other related stablecoins for payment activities.
“The new interpretive letter establishes that banks can treat public chains as infrastructure similar to SWIFT, ACH and FedWire, and stablecoins like USDC as electronic stored value. The significance of this can’t be understated.”
Congrats on this regulatory capture. Seriously. https://t.co/ypHHKPsbr0
— Angela Walch (@angela_walch) January 5, 2021
The truth is, however, more complicated. Caitlin Long who is a Wall Street veteran that crafted a slate of blockchain laws in Wyoming said:
“Net-net, I see the OCC letter as a double-edged sword for the crypto sector.”
According to Long, the guidance will allow big banks to crow out crypto upstarts just as national banks won’t need approval from federal regulators before getting into stablecoins. She continued:
“But smaller banks and crypto companies applying for bank charters need to obtain prior approval before they can dive in. This system inherently favors large banks, and literally tomorrow we could see the biggest banks in the US to enter the market and build network effects faster than smaller banks and native crypto companies.”
1/ Breaking major news from US Treasury OCC, the largest US banking regulator (@USOCC), with new guidance allowing US banks to use public blockchains and dollar stablecoins as a settlement infrastructure in the US financial system. https://t.co/gQFWISWUnc
— Jeremy Allaire (@jerallaire) January 4, 2021
The new OCC regulations could pose a corporatocracy that is fueled by regulatory capture. Brian Brooks, the OCC head moved from being chief Legal Officer of Coinbase right to regulate the country’s banks at the OCC. Rohan Gray helped draft the STABLE act which will require companies issuing a stablecoin to get a bank license. He said:
“The good news here, I think, is that the letter affirms that stablecoin activities are part of the business of banking, and should be properly regulated as such and restricted to approved entities.”