The federal banking regulator published an interpretive letter addressing whether national banks and federal savings associations could use new technologies, including INVNs and related stablecoins, to perform bank-permissible functions, such as payment activities.
The letter said these financial institutions (including banks) may validate, store, and record payments transactions by serving as a node on an INVN. Likewise, a bank may use INVNs and related stablecoins to carry out other permissible payment activities. However, the letter also warned that a bank must conduct these activities consistent with applicable law and safe and sound banking practices.
Ravi Kumar, Market Analyst at AlexaBlockchain, commented:
“This is a groundbreaking development for the adoption of blockchain in banking system. It provides clear guidelines on how traditional financial institutions can do business involving digital currencies. Before this guideline, some banks were unsure about whether they could use the underlying blockchain as payment networks.”
A stablecoin is a type of digital currency that aims to maintain a stable value and is backed by an underlying asset or a benchmark, such as the value of a fiat currency, or a basket of assets that could include investment securities and commodities.
