USA backs stablecoins for payments
The Office of the Comptroller of Currency (OCC) published a letter on 4th January addressing the issue of whether or not national banks could participate in using blockchain networks (INVNs), or stablecoins. The answer is that they can.
It even went so far as to say that INVNs “may be more resilient than other payment networks due to the large number of nodes needed to verify transactions, which can, in turn, limit tampering,” according to the Coindesk report. Kristin Smith, executive director of the Blockchain Association, tweeted “the letter states that blockchains have the same status as other global financial networks, such as SWIFT, ACH and FedWire.”
Smith also told Coindesk during a phone call, “[Monday’s OCC letter] goes to show that there’s not an all-out assault on cryptocurrencies, that there are bright spots in the government that realize that crypto networks are going to be the foundation of future payments systems and other financial services applications, so we welcome this type of interpretive guidance.”
Countries move towards a sovereign digital currency
Digital money as a national currency is growing in favour with numerous governments. One thing that is pushing them in this direction is DeFi (decentralised finance), which was a leading story in 2020 for blockchain and cryptocurrencies. As people worldwide use cash less frequently, the argument for digital sovereign currencies becomes more compelling, as this Forbes article explains.
All eyes are also on China, which has been trialing its e-yuan in Shenzhen and Beijing since the end of 2020, giving it a head start over other countries and regions. Meanwhile the European Central Bank (ECB) is exploring the digital euro as both a retail and wholesale central bank digital currency (CBDC). The ECB’s president, Christine Lagarde, said in September 2020, that “a digital euro would allow the bloc to be at the cutting edge of innovation, but the lack of payments integration in Europe indicated that foreign providers have taken the lead.” She argues that a digital euro should complement cash and not be a substitute for it, remarking, “Europe will continue to ensure that all its citizens have access to banknotes at all times, and the two combined would support financial inclusion and offer consumers a choice.”
All this adds up to a good start to 2021 for digital money and digital payments. It has taken a decade for governments to warm to these new financial products, but now it looks as if they have finally realised that it is a case of better to be with them than against them. We expect to see many more positive stories throughout 2021, and we’ll be tracking the most important ones for you.