- The OCC has granted preliminary approval to Ripple’s bid to become a national trust bank, signalling big things coming for XRP in the future.
Ripple is on its way to elevating its game further. Together with Circle, the blockchain infrastructure solutions provider has secured preliminary approval from the Office of the Comptroller of the Currency (OCC) to operate under a national trust bank charter conditionally in the US.
Ripple’s Progress in Its National Trust Bank Advance
The OCC has yet to grant Ripple final approval to convert into a trust bank. Nonetheless, if the company is successful in its bid, the event will signal a significant milestone for the digital asset sector. It will become one of the first blockchain- or crypto-based companies to gain such status in the US, alongside Anchorage Digital, which received the regulator’s nod in January 2021.
As a national trust bank, Ripple will be able to manage and hold assets on behalf of customers. Additionally, it will allow its payments network to operate in the same ecosystem as traditional finance (TradFi) players.
It’s worth noting, though, that a national bank’s function is limited only to custody, settlement, and fiduciary services. Hence, it cannot offer loans or accept deposits like regular banks.
Jonathan Gould, the Comptroller of the Currency, stated that the inclusion of Ripple and other entities into the federal banking system is good for the industry, consumers, and the economy. He explained that they open up access to new products, services, and sources of credit while ensuring a more dynamic, competitive, and diverse banking ecosystem.
Why This Matters for XRP?
Ripple and XRP’s growth generally exhibits strong medium- and long-term correlations. With that, any progress in the company’s regulatory standing translates into increased mainstream adoption of XRP Ledger’s (XRPL) infrastructure, which relies on XRP for its transactions.
The Web3 institution becoming an integral part of the TradFi infrastructure is the core implication. The OCC’s designation of Ripple as a regulated entity under the Ripple National Trust Bank framework will provide an unprecedented level of institutional de-risking for institutions adopting XRP, including other XRPL-based assets such as the Ripple USD (RLUSD) stablecoin, for their treasury management or transaction settlement.
The token can leverage Ripple’s upgrade, bringing its assets under a federally regulated umbrella within the USA’s stringent financial laws. This will be a massive step towards its acceptance in institutional investment and reserve portfolios, giving it a competitive edge against other top crypto assets like Bitcoin (BTC), Ethereum (ETH), and even Tether’s USDT stablecoin.
Meanwhile, the milestone will considerably strengthen the Ripple Payments network, particularly its On-Demand Liquidity (ODL) layer. The platform, powered by XRP, will benefit from enhanced settlement authority as RNTB navigates the established payment and settlement frameworks in which conventional banks and TradFi operate, including potential direct access to Fedwire and FedNow in the future (pending further approval from the US Federal Reserve). This feature will also drastically mitigate counterparty risks for participants using Ripple’s cross-border payment infrastructure.
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