The United States Government Releases Letter Supporting the Use of Public Blockchains and Stablecoins by Federally Chartered Banks

January 5, 2021

The Office of the Comptroller of the Currency in the United States has issued a letter to the public clarifying that national banks and federal savings associations indeed have the authority to use stablecoins and independent node verification networks (a.k.a. public blockchains) to conduct business.

Why This Is Big News for Bitcoin

The fact that the Office of the Comptroller of the Currency is officially standing behind stablecoins and blockchains as viable within the traditional banking system is an admission of the old adage, ‘if you can’t beat them, join them’.

It officially opens the floodgates in terms of increasing the likelihood that the traditional financial system will start its own mass adoption of cryptocurrencies. Add this to the fact that the price of Bitcoin is skyrocketing at the moment and that last year saw not one, but two cryptocurrency exchanges become chartered banks and it looks like Bitcoin adoption is about to reach a whole new level in 2021.

There is however a downside to the news as well.

Unlike public blockchains which operate in a trustless and decentralized manner, banks themselves are centralized entities. They will still have to follow government regulations in terms of Know Your Client verification and they will still have to follow the laws that a traditional bank has to follow. This means that customers doing business with banks will still have to give up their privacy and ultimately trust a central authority even if that central authority is using cryptocurrencies to facilitate transactions.

Increased acceptance of cryptocurrencies by the traditional financial system also likely means an increased effort on the part of governments to try to control what consumers can or can’t do with their wealth.

Why This Is Ultimately Bullish News for the Long-Term Value of Bitcoin

Research shows that when there is a greater quantity of U.S. Dollar Tether tokens made available through crypto exchanges, the price of Bitcoin goes up. Today, the Tether token is the third most valuable cryptocurrency in the world by market capitalization. As more liquidity enters the market, more investors want to use stablecoins for settling transactions and participating in things like yield farming and lending.

With major banks in America getting clarity on the fact that they will indeed be allowed to conduct business using stablecoins, more liquidity will inevitably enter the market and interest in stablecoins in general will increase. This will ultimately act as a catalyst in favour of a larger Bitcoin price increase. When that will happen is anybody’s guess, but it seems to be just a matter of time.

Buy Bitcoin at a cryptocurrency exchange in Canada you can trust. Register with Netcoins today, because it’s looking like things are about to get a little bit more interesting in 2021.