On the evening of January 4, the Department of Treasury's Office of the Comptroller of Currency shared an update to national banks. The update offered guidance that the banks can run independent nodes on a spectrum of distributed ledger networks. The interpretive letter went on to say that banks can use new technologies, including independent node verification networks and related stable coins in order to perform permitted functions, such as payments.
This is a big deal because there had been a lot of uncertainty around the future of stable coins. Even with this announcement, the Office of the Comptroller of Currency cautioned banks that there are a lot of cybersecurity risks inherent with the use of this technology. The letter stated that banks have to be aware of the potential risks involved when they engage in independent node verification network activities. The bank needs to have up-to-date security and experts who know how to properly manage the risks in a detailed, logical, methodical and sound way.
Brian Brooks, who used to be the leader of the legal team at Coin Base, has served as the Acting Comptroller of the Currency since May 2020. Since his arrival, the office has created a plethora of guidance around what banks can and need to do in cryptocurrency. One of the most recent pieces of guidance related to prohibiting banks from cutting off service to the legal industry.
A large lobbying group, called the Blockchain Association, explained that the letter will allows blockchains to have the same legal status as other types of global financial networks. They will function like ACH debits. These mechanisms for international payments have created a lot of competition for blockchain payment systems. The lobbying group also noted that regulators will be setting up new guidance for the operators of stable coins in the next two weeks. This guidance will follow up on separate regulations that explained how stable coins can be used.
The status of stable coins has been a big topic of discussion. Congresswoman Tlaib introduced a bill that could outlaw stable coin networks that process DAI transactions.