The USD-backed stablecoin market has grown over 445% in the past year, catapulting from around $5.5 billion in January 2020 to more than $30 billion today. That’s crazy! But it shows what growth potential we have for this category of digital currency.
That puts into perspective a move that happened last week, when The Office of the Comptroller of the Currency (OCC) issued a letter stating that national banks and federal savings associations can now use stablecoins and blockchains for payment transactions and validation, including issuing their own stablecoins and exchanging them for fiat currency.
“In this context, 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,” the letter states. “Just as banks may buy and sell ESV as a means of converting the ESV into dollars (and vice versa) to complete customer payment transactions, banks may buy, sell, and issue stablecoin to facilitate payments.”
This means that going forward, you can send a blockchain-based payment from your bank to someone anywhere in the world, rather than using SWIFT, ACH or FedWire transfer. This opens up huge opportunity for instant payments and overseas remittance to family members, and offers an option that “may provide a cheaper, faster, and more efficient means of effecting the payment,” the letter states.
Of course, banks using the blockchain infrastructure must follow current compliance laws and operational regulations set out for the industry. But that’s a small concession compared to the upside. As the OCC points out, blockchain “may be more resilient than other payment networks” because it uses a large number of nodes to verify each transaction, which limits potential tampering, manipulation and fraud.
If it seems strange to have decentralized payment options in a centralized banking system, it’s really just filling a hole left by mainstream finance in the USA.
“While governments in other countries have built real-time payments systems, the United States has relied on our innovation sector to deliver real-time payments technologies,” Brian Brooks, the Acting Comptroller of the Currency, said in a related press release. “Our letter removes any legal uncertainty about the authority of banks to connect to blockchains as validator nodes and thereby transact stablecoin payments on behalf of customers who are increasingly demanding the speed, efficiency, interoperability, and low cost associated with these products.”
This latest clarification comes on the heels of last fall’s announcement that federally chartered banks can hold reserve funds for fiat-backed stablecoin issuers, and last summer’s clarification that banks can offer custodial services for cryptocurrency.
Did you know you can buy and sell a selection of stablecoins, in addition to Bitcoin and other altcoins, at any Coin Cloud digital currency machine? Coin Cloud is the only major operator offering stablecoins, as well as the only one with a nationwide network of 100% two-way machines.
Disclaimer: The information and views supplied on the Coin Cloud blog are for educational and entertainment purposes only. We are not financial advisors, so please do your research and consult with a trusted financial specialist before investing your money.
Founded in 2014 in Las Vegas, Nevada, Coin Cloud is the leading digital currency machine (DCM) operator. With over 4,500 locations nationwide, in 48 states and Brazil, Coin Cloud operates the world’s largest and fastest-growing network of 100% two-way DCMs, a more advanced version of the Bitcoin ATM. Every Coin Cloud DCM empowers you to quickly and easily buy and sell over 40 cryptocurrency options with cash.
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