Crypto prices shot up late Monday after a federal banking regulator said in an explanatory letter that U.S. financial institutions are now allowed to use stablecoins for payment activities, and can participate as nodes in a blockchain.
“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,” Acting Comptroller of the Currency Brian Brooks said in a statement. Bitcoin is Going Ballistic…Again
This bolsters blockchain networks to the same level as global financial networks such as SWIFT, ACH and FedWire, the lobbyist group The Blockchain Association said in a tweet, dubbing it “a giant advance for crypto because it paves the way for these networks to be a formal part of the U.S. financial infrastructure.”
While the letter precisely cited stablecoins — digital currencies that are pegged to a relatively stable asset, such as gold or the U.S. dollar — prices of more volatile crypto’s spiked after the announcement. Bitcoin increased around 5%, while Ethereum, Ripple XRP, Bitcoin Cash, and Litecoin also notched solid gains. The price of the world’s largest crypto, Bitcoin, had dipped earlier Monday after a record-setting weekend when its price touched $34,000.
Ethereum, the second-largest cryptocurrency by market capitalization after Bitcoin, jumped by as much as 22% to $1,161.36, its highest level since 2018. In fact, Ethereum performed even more boldly than Bitcoin in 2020, rising over 600%. SEC Comes Down on XRP
The OCC letter mentioned that banks ought to keep its eyes peeled for potential risks, including fraud, and said they should guard against money laundering and terrorist funding by expanding their compliance practices to address the specific risks of crypto transactions. Surprise, Surprise: Coinbase Files IPO