- Banks can now validate, retailer, and file cost transactions by serving as nodes on INVNs.
- Based on the OCC, INVNs provide greater effectivity and stability for cost actions.
- Banks that run nodes on INVNs should adhere to related legal guidelines and provide secure, honest banking.
The Treasury’s Workplace of the Comptroller of the Foreign money (OCC) has greenlighted federally chartered banks to run nodes and use stablecoins for funds and different acceptable features. The company printed a letter on January 4, noting that nationwide banks or federal financial savings associates might validate, retailer, and file cost transactions by working as a node on unbiased node verification networks (INVNs). The OCC, nevertheless, asserted that banks should adhere to relevant legal guidelines whereas guaranteeing secure, sound, and honest banking practices even after embracing these applied sciences.
Within the letter, Performing Comptroller of the Foreign money, Brian Brooks stated,
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“Whereas governments in different international locations have constructed real-time funds programs, the US has relied on our innovation sector to ship real-time funds applied sciences. A few of these applied sciences are constructed and managed by financial institution consortia and a few are primarily based on unbiased node verification networks corresponding to blockchains.”
Brooks added that this letter seeks to eradicate any authorized uncertainty relating to the potential of banks to connect with blockchain networks as validator nodes. As such, banks will be capable of full stablecoin transactions on behalf of their clients, who’re steadily demanding the pace, effectivity, and interoperability related to the nascent asset class.
A forward-looking outlook
Based on the OCC, the federal banking system can profit considerably from participating in INVNs. Among the many perks that the system can make the most of embrace effectivity, effectiveness, stability of funds actions, and unlocking the advantages of real-time funds, which different international locations are already having fun with. The publication additional cited that the decentralized nature of INVNs would assist make the system extra resilient, seeing as a lot of nodes confirm transactions in a trusted approach. The OCC additionally identified that INVNs will help stop dangerous actors from tampering with data on a database.
Whereas the OCC believes in new applied sciences, it additionally acknowledged that adopting them would introduce dangers to the banking system. These embrace operational dangers, compliance dangers, and fraud. To this finish, the entity urged banks to make sure their technological experience suffices to handle such dangers successfully. The letter went on to notice that banks ought to guard in opposition to cash laundering actions and terrorist financing by enhancing their compliance packages. Other than this, banks may also have to stick to the reporting and recordkeeping necessities of the Financial institution Secrecy Act.