Crypto Company Ripple applied to American regulators for a charter of the National Bank, because the distinction between digital asset companies and traditional financial institutions is becoming more and more vague.
The decision of Ripple – announced in July on social networks by the CEO of the company, Brad Garlinghouse – of similar micross of Circle and Bitgo. Analysts believe that the collective pursuit of a national charter aims to strengthen credibility and to deepen the assimilation in Main Street.
But are initiatives something other than digital lipstick? Although national trust banks are chartered by the federal government, they cannot accept deposits or make loans, unlike conventional banks. Instead, they can have assets, supervise customer funds and superimpose relevant financial products, suggesting that this decision concerns vertical integration and dependence on third parties. Nevertheless, these developments serve as alarm clock for the traditional banking sector. Under a charter, digital asset companies would benefit from faster payment time and cost reduction, bypassing intermediate banks.
For some, the encroachment of digital companies based on blockchain should be considered complementary. “Blockchain entities no longer disturb on the sidelines, but the legitimate value guards capable of coexist with and completing the established banking systems,” explains Tim Chen, a global strategy manager at Mantle, a blockchain financial technology company. Even thus, Chen warns that conventional banks will have to accept that tokenization quickly changes the story.
“This required once the intermediaries and long settlement channels can now be made with a smart contract and a stable and regulated digital token,” he adds.
Charter requests must be approved by the Currency Controller Office, the Apex banking regulator in the United States. Ripple is also looking for a main Fed account which would give access to the payment infrastructure of the Federal Reserve. If it is granted, Ripple would be able to keep the reserves of Rlusd, its native stable, with the central bank. Circle made a similar application. Earlier in July, Bluechip, the Stablecoin rating agency, attached its ranking higher than Rlusd.
President Trump’s user -friendly policies have supported the increasingly keycoming movements by cryptographic companies. In July, the administration signed the law on engineering, which regulates stablecoins, in the law. Two other cryptographic laws, namely the Clarity Act and the anti-CBDC law on the state of surveillance, remain in instance.