The announcement this week from US Treasury Department’s OCC regarding National Banks’ and Federal Savings Associations’ use of INVNs and stablecoins represents a critical next step in the path to widespread adoption of the extraordinary technologies that are enabled by the use of public blockchains. It has long been recognized by both the public and private sectors that current payment systems fail to address the needs of a significant portion of the world’s population and there remain major inefficiencies in cross-border payments. Stablecoins were created to enable this access for all participants while simultaneously making it possible to exchange value between individuals and businesses at the speed of the internet. Today, USD Coin (USDC), the first Centre-standard stablecoin, is being used around the world to meet both challenges. We recognize the ability for major U.S. financial institutions to embrace the use of public blockchains and stablecoins is a major development in financial innovation.
The Interpretive Letter from the OCC highlights many of the potential solutions that can be addressed noting that “[t]he changing financial needs of the economy are well-illustrated by the increasing demand in the market for faster and more efficient payments through the use of decentralized technologies, such as INVNs, which validate and record financial transactions including stablecoin transactions.” USDC was created expressly to meet these changing financial needs. The trusted Centre stablecoin model, as embodied through USDC, is unique in the industry. USDC is issued by multiple issuers, each of which are regulated financial institutions. USDC runs on multiple public blockchains creating access to a vast developer community and the unique features of different chains. USDC and future Centre-standard stablecoins (currently in development) are enabling financial innovation. This is, in part, reflected by the steep trajectory of growth over the course of 2020. From a market cap of $500m as recently as February, we are currently approaching $4.5B of capitalization. We fully expect that growth to accelerate in the months (and years) ahead.
The OCC letter provides the clarity necessary for more regulated financial institutions to participate further in the innovation enabled by public blockchains and stablecoins. Our work with the industry to advance these efforts has only just begun.