- Ripple Labs is applying for a US national bank charter from the OCC to enhance regulatory oversight and trust in its RLUSD stablecoin, following Circle Internet Group’s (CRCL) similar move.
- The company also seeks a Federal Reserve Master Account through Standard Custody, acquired in February 2024, to hold RLUSD reserves directly with the Fed for added security.
- XRP rose 5.45% to $2.30, reflecting market optimism about Ripple’s efforts to align with US regulations, including the GENIUS Act, as crypto firms deepen ties with traditional finance.
Ripple Labs, a prominent player in the cryptocurrency sector, is making strategic moves to integrate more deeply with traditional finance, as evidenced by its recent application for a national bank charter from the US Office of the Comptroller of the Currency (OCC). This development, confirmed by Ripple CEO Brad Garlinghouse on X on Wednesday, aligns with a broader trend among crypto firms seeking regulatory oversight to bolster credibility and operational stability. The announcement coincides with a 5.45% surge in XRP, Ripple’s native cryptocurrency, which is currently trading at $2.30, reflecting market optimism about the company’s regulatory ambitions.
The pursuit of a banking license places Ripple in the footsteps of Circle Internet Group (CRCL), the issuer of the second-largest stablecoin, USDC, which applied for a similar OCC charter just two days prior. Circle’s move aims to establish a national trust bank to manage its stablecoin reserves, a step its co-founder and CEO Jeremy Allaire described as “proactive” to align with evolving US regulations. These efforts by both firms come in the wake of the US Senate’s passage of the GENIUS Act, a legislative framework designed to regulate stablecoin issuance. The Act mandates that larger stablecoin issuers, like Ripple and Circle, operate under OCC oversight, ensuring compliance with federal standards and fostering trust in dollar-pegged tokens.
Ripple’s application for a banking license is particularly significant for its Ripple USD (RLUSD) stablecoin, which is already regulated by the New York Department of Financial Services. Garlinghouse emphasized that, if approved, the charter would set a “new (and unique!) benchmark for trust in the stablecoin market,” as Ripple would be subject to both federal and state oversight. This dual regulatory framework could enhance RLUSD’s credibility, positioning it as a reliable option in the competitive stablecoin landscape. Currently, Anchorage Digital remains the only crypto firm holding a national bank charter, underscoring the exclusivity and prestige of such a designation.
In addition to the banking license, Ripple is seeking a Master Account with the Federal Reserve through Standard Custody, a crypto custody firm it acquired in February 2024. This account would grant Ripple direct access to the US central banking system, enabling it to hold RLUSD reserves with the Fed. Garlinghouse noted that this move would provide “an additional layer of security to future-proof trust in RLUSD,” reinforcing the stablecoin’s stability and appeal to institutional users. The application signals Ripple’s intent to bridge the gap between decentralized finance and the traditional financial system, a goal that has gained urgency as regulatory clarity emerges.
The broader context of these moves reflects a shifting landscape for cryptocurrency firms. Garlinghouse alluded to past challenges, referencing “Operation Chokepoint 2.0,” a term used to describe perceived efforts by the Biden administration to restrict crypto’s access to the financial system. However, he expressed optimism about recent developments, noting that “Congress is working towards clear rules and regulations, and banks are leaning in.” This suggests a thawing of tensions between the crypto industry and traditional finance, with regulatory frameworks like the GENIUS Act paving the way for greater collaboration.
Ripple’s strategic initiatives highlight its commitment to compliance, a cornerstone of its operations since its inception. By pursuing a national bank charter and a Fed Master Account, Ripple is positioning itself as a leader in the stablecoin market, where trust and regulatory alignment are paramount. The 5.45% rise in XRP to $2.30 underscores market confidence in these efforts, as investors anticipate that enhanced regulatory oversight could drive adoption of RLUSD and strengthen Ripple’s ecosystem. As the crypto industry continues to mature, Ripple’s proactive approach may set a precedent for others seeking to navigate the complex intersection of digital assets and traditional finance.
WallStreetPit does not provide investment advice. All rights reserved.
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