XRP News Today: Ripple Seeks US Banking License to Boost Stablecoin Trust

Ripple, the company behind the cryptocurrency XRP, has taken a significant step towards integrating with mainstream finance by applying for a US banking license. This move comes as part of a broader trend among crypto companies seeking to establish a stronger foothold in the traditional financial sector, driven by new regulatory requirements for stablecoins.

Ripple's application for a banking license is not an isolated incident. It follows Circle's bid to gain access to a banking license, which would allow it to store its USD reserves backing the USDC stablecoin and other assets. The push for banking licenses among crypto companies is a response to the GENIUS bill, which mandates that stablecoins must have proof of bank reserves.

Ripple's primary motivation for seeking a banking license is to gain full control over the fiat reserves of its dollar-backed stablecoin, RLUSD. Currently, Ripple manages cross-border payments through its distributed ledger technology. Securing a banking license would enable Ripple to store RLUSD reserves directly with the Federal Reserve, providing an additional layer of reliability and trust.

The implications of Ripple's move extend beyond just RLUSD. Multiple crypto projects are exploring the creation of banks to fill the void left by the collapse of Silicon Valley Bank. If Ripple successfully secures a banking license, it could set a new benchmark for trust in the stablecoin market, with both state and federal oversight.

However, even if Ripple fails to secure a banking license, it would still be able to launch a fully regulated stablecoin. The GENIUS bill envisions multiple types of legal issuers, including nonbank entities. Local banks would also have a convenient regulatory framework to launch tokens, ensuring that stablecoins remain a viable option for crypto companies.

Ripple's co-founder and CEO, Brad Garlinghouse, emphasized the importance of compliance and trust in the stablecoin market. He stated that Ripple is seeking a national bank charter from the Office of the Comptroller of the Currency (OCC), which would subject the company to both state and federal oversight. Garlinghouse also mentioned that Ripple is exploring the possibility of obtaining a Fed Master Account, which would allow RLUSD reserves to be stored directly with the Federal Reserve.

Ripple has long maintained close ties with banking institutions, offering its XRPL technology as an alternative to SWIFT payments. XRP has been viewed as a 'bankers' coin' in the past, as Ripple aimed to augment banking rather than disrupt it entirely. Despite its lack of an official banking license, Ripple has been categorized as a digital 'neobank' due to its range of services, including remittances, lending, asset storage, and payments.

Ripple's partnership with other payment providers, such as OpenPayd, further expands the reach of RLUSD and demonstrates the company's commitment to integrating with the traditional financial system. By seeking a banking license, Ripple is positioning itself as a leader in the crypto industry, paving the way for other companies to follow suit.