BREAKING - US Banks Can Participate In Blockchains And Use Stabelcoins For Payments

in LeoFinance3 years ago

Nope, this is not a hoax. I double checked it. What am I talking about, I quadruple checked it. I've read the original article twice. Some paragraphs more than twice.

So now I think I have a little bit of an understanding about what's going on and... This. Is. Huge.

The Facts

The Office of the Comptroller of the Currency (OCC), a govern agency, issued a public letter less than a day ago in which it clarifies the legality and the extent of the potential participation of banks in blockchains, "to conduct payment activities and other bank-permissible functions".

In short, banks can run their own validator nodes, and engage in payments using stablecoins. Blockchains are on the same layer of legality with inter-banking systems such as SWIFT or ACH.

The Implications

First of all, Ethereum jumped to a spectacular ATH of over $1,000. That's because there are a lot of stablecoins issued / running on that platform.

Second, from now on you can expect that your stablecoin transaction could be validated by a computer owned by a bank.

Third, you can also expect faster turnarounds when transferring money from one bank account to another. Turnarounds similar with blockchain times, ranging from seconds to minutes.

Fourth, this mix of trust between public, decentralized money processing infrastructures and private / state owned money processing infrastructures will have a huge impact on our lives. More speed, more transparency.

But, on the other side, expect quite a lot of pressure from private institutions on the public ones. Man greed cannot be cured with tech. So, this is just a small step in which private and public are both legal, but they are not intrinsically "friends". Blockchains validated by staking could see a trend in which banks will try to acquire all the liquidity, to become the dominant validators (although they may not "run" the network, they may get to a point where they want to collude for other functions, like price suppression, liquidity management, etc).

That's what banks do now anyway, using your money.

The (very) good news is that now you have a little bit of a say in that. It's not yet financial independence, but it's a small opening in that direction. It will require a lot of willpower, education and attention to further the progress we're already ironing now.


I'm a geek, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Hive you may stay updated by following me @dragosroua.


Dragos Roua


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Blockchains validated by staking could see a trend in which banks will try to acquire all the liquidity, to become the dominant validators (although they may not "run" the network, they may get to a point where they want to collude for other functions, like price suppression, liquidity management, etc).

That's the shitty part of all of this. Banks won't let this tech and innovation slip through their fingers. Having a bank card supporting stable coins wouldn't be such a bad idea though although that implies taht the bank will have a record of what you hold and spend on.

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Yeah this sounds pretty huge. They essentially greenlight all crypto projects by banks as well as allowing them to use existing blockchain infrastructure.

I mean I dont even know why Swift is slow. I have seen the files (MT 101) and I could parse them by hand in little time.

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hear that ? that's the sound of me crying in the corner after selling most of my ethereum in december

I hear you, brother!

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In short, banks can run their own validator nodes, and engage in payments using stablecoins.

Could you explain this a bit for me Dragosroua. I've never really understood what a stable coin is and how they differ from other tokens. And, therefore, why the banks are interested in them particularly.

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A stablecoin is a crypto token pegged to a fiat currency. The oldest one is Tether. But there are others too, like TUSD (True USD), USDC (USD Coind), etc. The idea is that these tokens are backed 1:1 with real fiat. So, if the circulating supply of such a token is 1 million, the issuer must have somewhere in cold storage (or accessible) 1 million USD. If the supply decreases to 700k, the backing amount will also be $700k.

The roles of these stablecoins is to act like "mirrors" of the fiat currencies. Instead of buying, let's say, Bitcoin with your USD, you buy instead Tether, and then exchange the Tether to Bitcoin. If you sell your Bitcoin, you may choose to sell it for Tether too, and once you want to actually use the USD value stored in that amount of Tether, you sell it for actual USD.

These stablecoins are issued on their own blockchain, just like Bitcoin, and that makes them very liquid, ready to use, without the friction of fiat currencies. That's why they are use instead of fiat, because you can move them faster.

My hunch is that banks want to use them for the same reason, because they are fast and the infrastructure behind them is basically free for them.

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