on the crypto
Cryptocurrency prices surged Monday night after the US Office of the Comptroller of the Currency (OCC) issued a letter approving US banks to use public blockchain networks.
The letter from the OCC
The federal banking regulator has published a letter calling for national banks and federal savings associations to participate in independent node verification networks (INVNs, otherwise known as blockchain networks) or use stablecoins.
The letter states that these financial institutions can participate as nodes on a blockchain and store or validate payments. Any bank participating in an INVN must be aware of operational, compliance or fraud risks when doing so, the OCC warned in a press release.
However, the office pointed out that INVNs "may be more resilient than other payment networks" due to the large number of nodes required to verify transactions, which in turn can limit tampering.
Cryptocurrencies in green after the announcement of the authority
Ether (quotation ETH) jumped nearly 12% after the letter was published, given the dominant position of the Ethereum blockchain as a stablecoin payment settlement protocol. Bitcoin also gained 5%, and both major cryptocurrencies almost fully recovered their losses on Sunday night.
“After a flurry of negative regulatory news, investors are delighted to see positive regulatory news enabling the integration of public stablecoins and blockchains into traditional banking,” said Justin Yashouafar, managing partner of Santa Monica-based Blockhead Capital.
Breakthrough by the US government on regulations for stablecoin issuers
The letter from the OCC is in contrast with a bill introduced in the last session of Congress according to which stablecoin issuers were required to meet specific requirements in order to obtain banking licenses.
This proposal, decidedly anti-stablecoin and driven by massive government pressure for quick approval, has resulted in hundreds of thousands of dollars in donations sent to the leading cryptocurrency advocacy group Coin Center.
In fact, in mid-December, the Treasury Department proposed new know-Your-Customer (KYC) rules for US investors with cryptocurrency holdings who intend to transfer their shares from an exchange to their personal wallets.
Bitcoin and Ether also drag altcoins linked to stablecoins up
Yashouafar noted that positive reactions from bitcoin (BTC) and ether on Monday were followed by more native token price hikes on other networks that support stablecoins, such as Algorand and Solana, which both support the two largest stablecoins: tether. (USDT) and Circle's USDC stablecoin.
Yet while ether and algorithand (ALGO) prices "reacted immediately to the news," Yashouafar stressed that this was not the case for Solana. Bitcoin gained nearly 13% in the first few days of 2021 from the latest published data alone, with prices even well above $ 32.500. Ether is trading just below $ 1.100, about 25% below its record high of $ 1.448.
