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Circle CEO Jeremy Allaire says that the crypto industry just witnessed a historic milestone as regulators issue new crypto guidance for US banks.
In a new Real Vision installment, the internet entrepreneur touches upon a number of novel recommendations handed down by US regulatory bodies.
Allaire highlights the Office of the Comptroller’s (OCC) recent instruction regarding banks’ rights to utilize stablecoins in addition to the explicit guidance published by the President’s Working Group on Financial Markets on digital payments and stablecoins.
Allaire says the pairing of the events is deeply significant for the crypto industry and its future in finance.
“I think [the OCC’s guidance] is a major watershed event. And I think there are a few pieces to it. I think the first is it follows on the heels of the Presidential Working Group policy recommendations on dollar stablecoins in the United States, which came out just before the holidays. And that really had to do with saying arrangements that are created for the issuance and operation of stablecoins need to meet a set of expectations.
The OCC guidance is getting very specific. It’s saying, OK, if you are a bank in the United States financial system, you can utilize stablecoins as a payment infrastructure. You can issue them yourself as well. So you can participate in issuance, but you can utilize it as a payment infrastructure on par with ACH, on par with Swift, on par with Debit Network Rails. And it defines how to classify and think about it as an electronic stored value medium.”
Allaire says the guidance stemming from these authorities also opens up the possibility for banks to bring public blockchains into the mainstream financial system.
“And [the OCC] specifically provides a whole set of guidance on using this on public blockchains. And so it is elevating public blockchains like the Bitcoin network, the Ethereum network, and other public blockchain networks to being market infrastructure for the mainstream financial system in the United States, which is a huge deal.”
The Circle chief executive is also optimistic about recent efforts from the U.S. Securities and Exchange Commission (SEC) to clarify how broker-dealers can handle digital assets.
“I think [the OCC’s guidance] is significant, and it ladders on the SEC guidance that came out in late December as well, which basically after three years, the SEC finally clarified that broker-dealers can self-custody, clear, and settle digital assets around custody rules, and transfer rules, and so on.
But it clarified how broker-dealers can do that. And that also includes settling, essentially, these digital assets as securities transactions on public blockchains. And so we now essentially have the SEC and the OCC saying, public blockchains are effectively a settlement infrastructure for securities and cash-like instruments in the United States. That’s a big deal. That’s a really big deal.
And obviously, the markets responded a lot to that, because I think banks can now lean into this, right? So banks can lean into, whether it be crypto brokerage, or I want to custardy Bitcoin, or prime broking.”
Featured Image: Shutterstock/Andrey Yurlov