Ripple’s attempt to get a US banking license is facing serious pushback. A group of bankers, the Independent Community of Bankers of America (ICBA), has filed a strong seven-page objection with the Office of the Comptroller of the Currency (OCC).
Concerns About Ripple’s Stablecoin and Regulatory Compliance
The ICBA’s main worry is Ripple’s plan to use its new bank, Ripple National Trust Bank (RNTB), to manage its stablecoin, RLUSD. They argue that even though national trust banks can’t take deposits, RLUSD would act like deposits, letting Ripple avoid normal banking rules.
The ICBA also points to Ripple’s past issues with anti-money laundering (AML) rules and securities laws. They say this history raises serious concerns about letting Ripple operate a bank. They believe Ripple’s actions could blur the lines between traditional banking and the crypto world, potentially undermining Congress’s intent when creating national trust bank charters.
Wider Implications for the Banking Industry
This isn’t just about Ripple. The ICBA’s opposition shows a broader unease among traditional banks about stablecoins entering the mainstream banking system. The debate is whether stablecoin companies should face the same rules as regular banks, especially if their products act like deposits.
The ICBA warns that approving Ripple’s application could set a bad precedent, letting other fintech and blockchain companies avoid standard banking regulations. This highlights the ongoing tension between innovation and compliance in the crypto industry.
The ICBA even brought up a past case where Ripple paid a $700,000 fine for not registering as a money services business and having weak AML procedures. This past incident further strengthens their argument against Ripple getting the banking license.
In short, the ICBA believes approving RNTB’s charter would be risky, potentially harming consumers and the banking system’s integrity. They want the OCC to take a much closer look at Ripple’s application.