US Treasury Announces Support for Stablecoins, Bitcoin drops below $30,000

The Office of the Comptroller of the Currency (OCC), US Treasury’s independent bureau, published a letter on Monday mentioning that the banks will be able to use stablecoins to execute transactions. The cryptocurrency market did not react positively to the news as Bitcoin dipped below $30,000 following the announcement.

According to the official letter issued by the OCC, banks including Federal savings associations may participate in independent node verification networks (INVN), also known as Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term networks, to conduct bank-permissible functions.

The recent release by the OCC outlined a controlled use of stablecoins but did not give any clarity about Bitcoin and other cryptocurrency assets. Moreover, the regulator mentioned the potential risks associated with blockchain technology and the use of stablecoins, including compliance risks and fraud.

Commenting on the recent announcement, Brian Brooks, Acting Comptroller of the Currency, said: “The President’s Working Group on Financial Markets recently articulated a strong framework for ushering in an era of stablecoin-based financial infrastructure, identifying important risks while allowing those risks to be managed in a technology-agnostic way. Our letter removes any legal uncertainty about the authority of banks to connect to blockchains as validator nodes and thereby transact stablecoin Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term on behalf of customers who are increasingly demanding the speed, efficiency, interoperability and low cost associated with these products.”

Permissible Stablecoins Activities

The official announcement mentioned that banks are only allowed to carry out permissible payment activities through stabelcoins and the financial institutions participating in the blockchain transactions must comply with safe and fair banking practices. Additionally, the OCC stated that the banks must develop a sound risk management structure before implementing blockchain technology for transactions.

“This is a huge win for crypto and stablecoins. The recent announcement paves the way for the use of leading dollar digital currencies such as USDC as a mainstream payment medium for all forms of payments and settlement, and helps put the US in a leadership position in embracing the power of public blockchains,” Jeremy Allaire, Co-founder and CEO of Circle, said on Twitter.

The cryptocurrency market reacted negatively to the recent announcement as the world’s leading digital currency, Bitcoin dropped below $30,000 and Ethereum dipped below $1,000.