Ripple Labs has applied for a national bank trust status from the Office of the Comptroller of the Currency (OCC). The move comes after Circle, issuer of USDC, also applied for a national bank trust status. The price of XRP jumped 3% after the news broke about Ripple. A US national bank trust would embed Ripple further in the American financial system. If Ripple gets approved by the OCC, it will be one of the few crypto firms that have a national trust license. A national trust license would allow Ripple to manage custody of their clients crypto holdings. This would allow Ripple to further expand their crypto services and develop their status as a global remittance token. They could join the ranks of other crypto banks such as Anchorage Digital Bank, in having a national trust license.
Jack McDonald, vice president of stablecoins at Ripple, said that Ripple was setting a new standard for the stablecoin market, seeking regulatory approval to enable cross-border transactions. Ripple’s stablecoin RLUSD was released in late 2024 and has started to gain traction amongst a positive regulatory environment in the US. RLUSD pales in comparison to other stablecoins such as USDT and USDC. RLUSD has a market capitalization of $469 million which still has a long way to go to catch up with Tether’s USDT. Ripple is also applying for a Federal Reserve Master Account, which would allow them to hold RLUSD reserves within the Federal Reserve and process withdrawals after US business hours. This added security would appeal to institutional investors who would require extra layers of security for large cross-border transactions.
The OCC would be joined by the New York Department of Financial Services (NYDFS) in regulating Ripple. This means that the crypto project would be regulated at both the state and federal levels. Ripple commented on this development by saying that XRP has always sought regulatory approval from the very beginning. Ripple has sought approval so that it could offer its services to corporate clients. This is evidenced by their application for a Federal Reserve account. They would be able to store reserves at the US central bank, which would embed Ripple further in existing financial structures.
Circle just applied for a national trust bank license, allowing them to oversee their own stablecoin reserves for their token USDC. Circle is another newcomer to the stablecoin market and is well behind Tether’s USDT token. Circle has been using the services of Blackrock to manage their stablecoin reserves. They would have a lot more freedom when managing their own reserves if approved by the OCC. Although, the company stated that they would still use the services of Blackrock for other projects. The Genius Act was just passed, which sets out a comprehensive list of rules for stablecoin issuers. Large scale issuers are now required to gain approval by the OCC. This has allowed stablecoin issuers like Circle and Ripple to gain regulatory approvals in what once was an uncertain market.
Brad Garlinghouse, co-founder and CEO of Ripple, said that the main reason for seeking a national bank trust was to backup RLUSD with secure reserves. The OCC will regulate the new national trust bank, which adds a new layer of security for the stablecoin. Garlinghouse explained that Ripple has always remained close to the banking system because it aimed to create an alternative banking service to the SWIFT standard. This is why Ripple uses the same ISO standards that SWIFT uses. However, Ripple will need to seek regulatory approvals from multiple countries if it is going to succeed in its goals to provide fast cross-border transactions for institutional clients. Ripple has been referred to as the banking coin due to its ambitions to become a decentralised global bank. For quite some time, Ripple was described as the banking token without an official banking license. But Ripple has always sought approval from the banking world because it desires to improve upon banking structures rather than disrupt them. Ripple provides many services for institutional clients such as remittances, lending, and asset storage. In order for Ripple to achieve its goals it will need to provide fast RLUSD transfers without any regulatory hurdles blocking its pathway.
