Ripple Seeks National Bank Charter for RLUSD Stablecoin

Ripple Labs, the company behind the cryptocurrency XRP, has taken a significant step towards integrating with traditional finance by applying for a national bank charter from the Office of the Comptroller of the Currency (OCC). This move, announced by Ripple's CEO Brad Garlinghouse, aims to bring the company's RLUSD stablecoin under dual state and federal oversight, aligning with new legislation such as the GENIUS Act. The GENIUS Act outlines regulatory requirements for stablecoin issuers and designates the OCC as the key federal watchdog for larger players in the space. This development follows a similar application by Circle Internet Group, the issuer of the USDC stablecoin, which also applied to the OCC to form a national trust bank responsible for managing its stablecoin reserves.

In addition to its OCC application, Ripple has also applied for a Master Account with the Federal Reserve. This would allow Ripple to hold RLUSD reserves directly with the Fed, providing a critical safeguard to reinforce long-term trust in the stablecoin. The application was made via Standard Custody, a crypto custody firm that Ripple acquired in early 2024. Garlinghouse described this feature as a critical safeguard to reinforce long-term trust in the stablecoin. The application was made via Standard Custody, a crypto custody firm that Ripple acquired in early 2024.

Garlinghouse explained that the tide is turning in Washington, with Congress advancing clearer crypto regulations and traditional banks showing renewed interest in engaging with digital asset firms. This is in stark contrast to the restrictive environment of previous years, which was often referred to as “Operation Chokepoint 2.0.”

Meanwhile, a group of billionaires, including PayPal co-founder Peter Thiel, is reportedly working on launching a new financial institution named Erebor to fill the void left by the collapse of Silicon Valley Bank in March of 2023. Erebor will focus on serving startups and cryptocurrency companies, and has already applied for a US bank charter to operate as a fully licensed bank. Thiel’s venture capital firm, Founders Fund, is said to be among the early investors in the new bank. Other backers reportedly include Palmer Luckey, co-founder of defense contractor Anduril, and Joe Lonsdale, founder of investment firm 8VC. Thiel is a long-time supporter of Bitcoin and the broader digital asset ecosystem, and he is also known for backing Bullish, a crypto exchange that recently filed for an initial public offering in the United States.

Erebor’s strategy seems to be centered on providing banking services and loans to early-stage startups and other high-risk ventures that have found it difficult to access capital in the wake of tighter financial regulations. The initiative is also seen as an attempt to reestablish a specialized financial services institution that mirrors the role Silicon Valley Bank once played in the innovation economy. The collapse of Silicon Valley Bank in 2023 sent shockwaves through the banking and crypto industries. It was shut down by California’s financial regulator after rapidly rising interest rates devalued its bond holdings. The bank failed when a flood of clients tried to withdraw funds, triggering a liquidity crisis. At the time, the bank served around half of all venture capital-backed tech and life sciences firms in the country. The demise of Silicon Valley Bank also contributed to a wider crisis that saw the downfall of other institutions like Silvergate Bank, Signature Bank, and First Republic Bank. The crypto sector was particularly hard-hit, with investment funds losing roughly 10% of their assets under management in a single week. Although Silicon Valley Bank still operates as a division of First Citizens Bank after its acquisition in March of 2023, its collapse shed some light on the vulnerabilities in the venture capital and digital asset banking landscape. Erebor now plans to fill that gap.