In order to achieve widespread usage as an alternative to fiat options, blockchain and cryptoassets need to be classified and treated as currencies; the recent update from the Office of the Comptroller of the Currency (OCC) is a great move in that direction.
The idea of blockchain and cryptocurrency was to serve as an alternative to existing fiat currencies, but without consistent and understandable guidelines this will remain an idea rather than reality. Putting into place some sort of rules and structure will help to encourage wider adoption of cryptocurrencies, and make doing so simpler for individuals and entrepreneurs.
Establishing frameworks and consistently enforceable rules might not have been the original motivation for blockchain or crypto entrepreneurs, but having these rules in place is essential for the continued development and maturation of the space.
The updated guidance from the Office of the Comptroller of the Currency allows U.S. financial institutions to back digital dollar stablecoins by holding deposits of fiat currency as reserves for stablecoins that are pegged 1:1 to the U.S. dollar. The reserve amount held by the back is required to always be equal to or more than the number of issues stablecoins.
While the regulatory discourse around blockchain and cryptocurrencies hasn't reached the fever pitch of that surrounding social media, it is extremely positive to see such proactive guidance from the OCC. Even though the guidance is very narrow in only addressing stablecoins pegged 1:1 with the U.S. dollar, it ensures innovators have a path forward for stablecoin experimentation with financial institutional buy-in by pulling inspiration from the ordinary pre-paid credit card. - Tyler Farmer | emailRead more...