Blockchain and cryptocurrencies happen to be a part of the financial and economic dialogue ever because bitcoin burst into the mainstream throughout 2017. Having said that, to become an integrated part of the fiscal system, and to finally act as the basis for another fiscal system, the blockchain and crypto space need to work with some of the most regulators it was developed to disrupt.
In the beginning, one of the primary issues and obstacles to broader crypto use for a medium of exchange and business transactions is that the price volatility that — or not — is closely associated with this asset class. Stablecoins were created and developed to tackle this matter, but after addressing the price volatility so often related to cryptocurrencies, there was one basic issue that remained unaddressed; the absence of regulatory guidance.
This all changed with the upgrade from the OCC.
Breaking this down information and updated guidance, there are a couple of key factors and facts which should be factored into every conversation.
Rules matter. It is almost impossible to overstate exactly how important and relevant that this updated advice is for the broader blockchain and crypto-asset space. The thought of blockchain and cryptocurrency was supposed to function as an alternative to present fiat monies, but without constant and clear guidelines that this will remain an idea instead of reality. Putting into place some sort of principles and structure will help to promote wider adoption of cryptocurrencies and make doing thus easier for individuals and entrepreneurs.
Establishing frameworks and always enforceable rules may not have been the original motivation for blockchain or crypto entrepreneurs, but using these principles in place is vital for the continued development and maturation of their area.
Not all crypto would be the same. This might sound redundant, but it is crucial to remember that not each cryptocurrency or blockchain is the same. Especially, and especially pertinent to this conversation, is that the current OCC guidance and update only apply to stablecoins that are backed by a 1:1 basis with existing fiat currencies.
What exactly are stablecoins?
From the context of actually being utilized as a medium of exchange, stablecoins seem to signify the most viable path ahead. Nevertheless, for all these cryptocurrencies to function as advertised, there ought to be equivalency to current fiat choices; the OCC advice is pointing in that direction.
Collaboration is key. Much has been written about just how blockchain and cryptocurrencies will disintermediate the existing financial system, but only represents a partial view of the circumstance. This recent update from the OCC seems to imply, on a growing basis, cryptocurrencies are getting to be a part of the incumbent financial system. Dealing with incumbents might not have been the original idea or goal of cryptocurrency associations, but it will appear that doing this will be vital to the success of the space.
The telling and upgrade from the OCC might have flown under the radar for several accounting and financial specialists, simply because there is so much news that comes in the company landscape on a nearly continuous basis.
This advice might have been issued by the OCC, and seem to only pertain to a stablecoins, but it’s a significant initial step in what will hopefully be a considerably enhanced regulatory landscape.
Rules and guidelines have a massive part to play in the success or failure of any thought, crypto is no exception to this function, and it looks like the rule makers are starting to realize the real potential of this industry.