US Bank Regulator: Dollars on Blockchain ‘Better Than Central Bank Monopoly on the Payments System’

Brian Brooks, the Acting Comptroller of the Currency and former head of Coinbase’s legal department, put forward blockchain as better than the United States’ current bank-dependent payments system.

On July 29, Brooks spoke with Aaron Klein of the Brookings Institution, a major U.S. think tank. In answer to hypothetical platforms for a future five-year term as Comptroller — Brooks is, at this point, in a liminal state as acting comptroller — Brooks emphasized decentralization:

“I’m a believer in decentralization. At the end of the day, I think that stablecoins and other blockchain-based tokenization of dollars are the most resilient model for long-term faster payments. Better than a central bank monopoly on the payments system.”

The government’s response to the COVID-19 pandemic brought to light a number of long-standing issues with payments systems. The conversation today emphasized the unfortunately technological barriers to sending $1,200 payments to U.S. citizens a few months ago.

The Office of the Comptroller of the Currency (OCC) is the office of the U.S. Treasury that handles federal banks. Just last week, the office made headlines for giving federally chartered banks the go-ahead to custody crypto assets. However, a point that arose in today’s discussion was an interesting history lesson.

As Brooks pointed out, the OCC came into existence thanks to the National Currency Act of 1863, not the National Banking Act of 1864, as is commonly thought. The 1864 Act did alter its predecessor and shift its focus onto banking regulation but, Brooks said: “Initially the idea was to create a single system of competitive payments.”

Klein and Brooks agreed that the way money operates in the U.S. is stuck in the past. “A hundred years ago we had the most advanced financial system in the world, and we still have the most advanced system in the world c. 1910,” Brooks commented.

In terms of updates to the modern system, the Comptroller said that regulators had been pushing for various solutions with limited results. “As a regulator, the question is, how do you do that,” Brooks said. “FedNow does not yet exist except on paper.” He did, however, highlight tech that already exists and is familiar to the crypto community as a potential solution:

“There are also existing private sector blockchain technologies on smart contracts where one can simply program the stuff and hit the automate button that instantly appear to anyone on that network.”

Brooks took on the role of Acting Comptroller at the end of May.

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