Note: Originally written on Jan 5th, 2021
Agent Brian Brooks
The OCC’s Interpretative Letter 1174, penned by Brian Brooks, is subterfuge.
Here’s the TLDR.
The letter greenlights banks to adopt new technologies to carry-out bank-permissible activities using Stablecoins and Independent Node Verification Networks. (Fancy and non-soiled word for Blockchain).
At first glance, we might be disgusted.
This is because the value proposition for banks here is compelling.
They receive all of the upsides of on-chain technology with a fiat-based native unit. Or in other words, they’re allowed to leverage the nerd-tech while exerting control within the legacy fiat system.
This is stark contrast from the mid 2010s $XRP era. A true herculean operation with no clear product roadmap, rampant legal cost, even more regulatory uncertainty, and general dismay toward this tech. Doomed to fail.
So let’s ask ourselves: why Brian, friend of Bitcoin?
Don’t worry.
Let’s instead piece together the letter as a series of events and reveal the cleverness behind 1174. Ultimately, there are no two ways about it, Brooks is / was a undercover Parisian revolutionary.
CryptoDollar Era
First some needed context. This time is different. Truly.
As of Jan 2021, there is $27+ billion of USD stable-coin (or crypto-dollars) on-chain free floating. A whopping ~400% y-o-y increase.
Working on the Street, the response still remains juvenile:
“Why do crypto people love fiat stables…weird”
“Illegal money laundering”
Tether FUD
Of course, TradFi can’t possibly fathom magical internet money leveraged on chain to conduct financial activity.
That said, without this necessary cryptodollar infrastructure, there would be no $AAVE or AVANTI or even BlockFi.
The takeaway: the letter would not have the same effect, and would not exist, if it were released before 2020.
To whose benefit
Again, I initially wrote that this was an opportunity for incumbent banks should they take up the offer.
Near-term bullish. (I know… ahaha).
DeFi was in the back of mind, which meant I was long-term bearish for banks.
Another close colleague of mine suggested this was intended for tradFi fintechs, such as $SQ and $PYPL.
I could sort of buy that story.
After some thought, however, both of these outcomes were clear narrative violations:
Why would Brian Books want to offer assistance to incumbent bank?
And, was the legislation really for $PYPL? Probabilistically speaking, it didn’t make sense.
CoinBase… Brian Brooks… CoinBase… Brian Brooks..
Self Driving Banks … AKA DeFi
Just a few days later, Brian pens this a piece on DeFi, validating my skepticism.
“Could the OCC even grant a national bank charter to open-source software that manages deposit-taking, lending, or payments, if it doesn’t have officers or directors? Not yet.”
A single day after the FT Piece, the nail-in-the-coffin arrives:
The OCC conditionally approved the conversion of '“Anchorage Trust Company, a South Dakota chartered trust company, to become Anchorage Digital Bank, National Association.”
A true lame-duck hurrah.
Rolling the Dice
Though, Brooks could never publicly admit it, it seems obvious after some introspection… he made the +EV decision for DeFi.
Said simply, the need to clarify blockchain technology for new crypto-native banks far outweighed incumbent banks snatching up the next crypto-rails.
Offer a silver platter knowing that your enemy would refuse it out of ignorance and ego.
To anecdotally quantify the dice-roll:
60% -> crypto-native banks receive bank charters
10% -> DeFi protocols begin to apply for bank charters
and, 30% -> incumbent banks recognize the threat and position defensively

I’ll take the odds as well, Mr. Brooks.
Pour l'avenir de la France,
A.K