, in connection with their provision of payment services, to (i) validate, store, and record payment transactions by serving as a node on an Independent Node Verification Network (INVN), for example, a blockchain node,1 (ii) provide stablecoin exchange services, and (iii) issue stablecoins to carry out permissible payment activities.2 This confirmation of authority comes with a price, however — the OCC's adoption of the statement by the President's Working Group on Financial Markets (PWG) that stablecoin arrangements "should have the capability to obtain and verify the identity of all transacting parties, including for those using unhosted wallets."3

The principal thrust of the Letter is a further endorsement by the OCC to the role of banks in the cryptocurrency space. Last year, the OCC addressed the permissibility of banks holding reserves for certain stablecoins backed by fiat currency4 and the ability of banks to custody digital assets.5 In this case, the OCC moves a significant step forward by confirming the authority of banks to connect to blockchains as validator nodes, exchange fiat currency for stablecoin, and vice versa and issue stablecoins as payment mechanism. Importantly, unlike the position adopted by the OCC in its previous opinions, the Letter does not limit the banks' payment activities to stablecoins supported by fiat currency (or to stablecoins backed by U.S. dollars) or to customers for whom the bank is performing custody functions.