Caitlin Long, the founder of the “cryptobank” Avanti, believes that the new OCC rules on payments in stablecoins will only benefit large banks.
Earlier this month, the Office of the Comptroller of the United States of America (OCC) provided clarifications according to which American banks are allowed to use open blockchains and stablecoins to process payments. Many members of the cryptocurrency community considered this news a victory for the industry over the regulators.
Circle CEO Jeremy Allaire tweeted that banks can now view open blockchains as infrastructure similar to the international financial settlement systems SWIFT, ACH and FedWire. Therefore, the importance of the new OSS rules cannot be underestimated.
However, Caitlin Long called these rules “a double-edged sword.” Long explained that the new regulation will allow large banks to oust smaller banks and financial institutions that work with digital assets. It is likely that state banks may not need federal regulatory approval to use stablecoins. Small banks and businesses are required to obtain prior approval to work with stable cryptocurrencies.
“Such a system initially favors large US banks. They will enter the cryptocurrency market tomorrow and create a whole network. Corporations will seize power and leave smaller banks and cryptocurrency firms out of the way, ”Long said.
Rohan Gray, who participated in the drafting of the Stablecoin Pegging and Bank Licensing Act (STABLE), which requires stablecoin issuers to obtain a banking license, called the new OCC rules good news for the cryptocurrency industry. These rules confirm that stablecoin transactions are directly related to banking and should be properly regulated. At the same time, Gray believes that it is unsafe for banks to interact with third-party stablecoin issuers and use open blockchains.
Long also believes that banks can face many obstacles in making payments with stablecoins. For example, banks must receive confirmation of commissions from their customers. However, there is not a single ERC-20 wallet that provides such prior confirmation prior to a transaction.
A division of the US Treasury Department is becoming increasingly supportive of cryptocurrencies. In July, the OCC allowed U.S. banks to hold their customers’ digital assets, and last month an OCC economist highlighted the benefits of issuing a banking license to stablecoin operators.
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