Markets

Crypto Markets Jump on OCC Approval for Banks to Use Blockchains

Cryptocurrency prices jumped Monday evening after the U.S. Office of the Comptroller of the Currency (OCC) issued a letter approving U.S. banks to use public blockchain networks.

Ether jumped nearly 12% on the letter’s release, given Ethereum’s dominance as a stablecoin payment settlement protocol. Bitcoin also gained 5% and both leading cryptocurrencies almost fully retraced Sunday evening’s losses.

“After a flurry of negative regulatory news, investors are pleased to see positive regulatory news allowing stablecoin and public blockchain integration into the traditional banking sector,” said Justin Yashouafar, managing partner at Santa Monica-based Blockhead Capital.

The letter addressed national banks and federal savings associations participating as nodes on a blockchain and storing or validating payments made in native digital assets or stablecoins. 

The OCC’s letter stands in contrast to a bill introduced in the last Congressional session that would have required stablecoin issuers to obtain bank charters. That aggressively anti-stablecoin proposal resulted in hundreds of thousands of dollars in donations sent to leading cryptocurrency advocacy group Coin Center.

In mid December, the Treasury Department proposed enhanced know-your-customer (KYC) rules on U.S. cryptocurrency users hoping to transfer their holdings from an exchange to their own personal wallets.

Yashouafar noted bitcoin and ether’s positive reactions Monday were followed by price jumps from native tokens for other stablecoin-supporting networks, like Algorand and Solana, both of which support the two largest stablecoins: tether (USDT) and Circle’s USDC stablecoin.

Yet while the prices of ether and algorand “reacted immediately to the news,” Yashouafar pointed out that Solana’s had not.

Bitcoin has gained nearly 13% already in 2021 at last check, trading hands above $32,500. Ether is trading just below $1,100, roughly 25% below its record high of $1,448.

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