Bank of America Sees Payments Moving On-Chain as Regulators OK Stablecoins

Bank of America reportedly found that United States regulators are mapping out a plan for stablecoins and tokenized deposits.

The U.S. has begun an ongoing shift that could move more real-world assets and payments on-chain, CoinDesk reported Monday (Dec. 15).

Bank of America pointed to the Office of the Comptroller of the Currency’s conditional approval Friday (Dec. 12) of national trust bank charters for five digital asset companies, calling it a crucial step toward federal acceptance of stablecoins and crypto custody, per the report.

A national bank charter can offer advantages, including the preemption of state banking laws in some areas, access to the Federal Reserve payments system, and the license of federal supervision, which can all make it easier to scale operations nationwide.

“The five application approvals, which have long been sought after by digital asset companies, represent a departure from the OCC’s more traditional trust bank cadre, which has historically been dominated by institutions focused on custodial and fiduciary services for conventional assets,” PYMNTS wrote Friday. “Taken as a whole, the five new approvals add momentum to a narrative that digital asset firms can operate in the regulated financial mainstream without starting from traditional banking roots.”

Meanwhile, Bank of America also looked at efforts by JPMorgan and Singapore-based DBS to explore an interoperable framework for tokenized value transfer across public and permissioned blockchains, according to the CoinDesk report.

“That work, building on JPMorgan’s JPMD tokenized deposit initiative, underscores a live debate over whether tokenized deposits are a better alternative to stablecoins,” the report said.

Bank of America envisions a future where bonds, stocks, money market funds and cross-border payments move on-chain, bolstered by new rules and institutional-grade infrastructure, per the report. To get ready for this, banks will not only need a familiarity with blockchain but also show a readiness to experiment with tokenized assets and on-chain settlement.

Also Monday, it was reported that JPMorgan is preparing to introduce its first tokenized money market fund.

“There is a massive amount of interest from clients around tokenization,” said John Donohue, head of global liquidity at J.P. Morgan Asset Management, according to The Wall Street Journal. “And we expect to be a leader in this space and work with clients to make sure that we have a product lineup that allows them to have the choices that we have in traditional money market funds on blockchain.”