Ripple became the latest major crypto firm to apply for a US banking license, following Circle earlier this week.
Ripple CEO Brad Garlinghouse announced the news in a 2 July post on X, stating:
“True to our long-standing compliance roots, @Ripple is applying for a national bank charter from the OCC. If approved, we would have both state (via NYDFS) and federal oversight, a new (and unique!) benchmark for trust in the stablecoin market.”
Reserves at the Fed
It wasn’t the only application Ripple submitted this week. The company also applied for a Fed Master Account, via subsidiary Standard Custody which would “allow [Ripple] to hold $RLUSD reserves directly with the Fed.” $RLUSD is the stablecoin issued by Ripple.
Ripple’s announcement comes only two days after Circle, known for issuing the USDC stablecoin, announced its application with the OCC “to establish a national trust bank, First National Digital Currency Bank, N.A.”
Mainstream finance integration
The national trust and bank charters are a notable step forward in the integration process for crypto within the TradFi space. Depending on the specific licence, crypto firms may be able to act as more conventional financial institutions, for instance by issuing loans or taking deposits. Other, more specific licences would enable a company to oversee its own reserves and hold assets on behalf of institutional clients or simply establish USD-denominated stablecoins.
However, it comes at a cost. Anchorage Digital, the only crypto firm in the country with a federal bank charter so far, has spent “tens of millions” to be in compliance with the necessary regulations, the Wall Street Journal has reported.
In their respective announcements, both Ripple and Circle underscored the importance of regulation in the crypto landscape.
GENIUS alignment
These applications are in line with expected requirements of the GENIUS Act, which will mandate national banking licences for stablecoin issuers. The legislation, which is currently going through the US House of Representatives, will establish a more robust regulatory framework for stablecoins, and if passed would require issuers to support their tokens with liquid assets and to regularly disclose the composition of the reserves they hold as a backstop to the coins.
“We will align with emerging US regulation for the issuance and operation of dollar-denominated payment stablecoins,” Circle said in a press release.
$RLUSD has a market cap of about $469 million while $USDC is at about $61billion.
