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Happy New Year! + OCC OKs Stablecoins


Happy New Year from the most consistently inconsistent blogger to ever have blogged! I've finally accepted myself for who and what I am in hope that I'll surprise myself by becoming inconsistently consistent. I'm trying to make 2021 "The year of execution" so *fingers crossed* we shall see.


On to the Office of the Comptroller of the Currency (OCC)...


Yesterday, the OCC announced (well, clarified) that banks are able to use distributed ledger technology (e.g., blockchain) to verify and store transactions and they are also able to transact stablecoins. Banks must continue to comply with the applicable laws and other sound banking practices, such as "Know Your Customer," anti-money laundering controls, and Office of Foreign Assets Control sanctions. However, the OCC recognizes the efficiency and security benefits associated with blockchain technology in banking. The regulator also recognizes the banking industry's track record of competently (mostly) deploying innovative technologies in the provision of services and other banking activities. Swiping wasn't always the predominant way of transacting money, friends.


The real eyebrow-raiser here is the express permission to transact and issue stablecoins. Stablecoins are digital currencies that are pegged to a stable, less volatile asset (fiat currency (e.g., USD) or some other asset). These coins are increasingly in demand among people who regularly use or trade digital currency because of their stability relative to other coins. The OCC offers its blessing for banking institutions to issue stablecoins in exchange for fiat currency and reasons that stablecoins "function as a mechanism of payment, in the same way that debit cards, checks, and electronically stored value (ESV) systems convey payment instructions. Banks have long used cashiers’ checks, travelers’ checks, and other bearer instruments as a means of facilitating cashless payments." **Mic drop**


Ultimately, the OCC letter is good press for the financial regulator but has little practical bearing on the banks. Many of the major financial institutions have made incredible headway in leveraging blockchain technology in their businesses and exploring their own digital currencies. But any day a government entity lauds the positive attributes of blockchain is a good day.


You can see the full OCC interpretive letter here.


So which banks' coin achieve the largest market cap by the end of the year? Any bets?



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