Leading crypto firm Ripple Labs is actively pursuing a banking license in the United States, a move that mirrors a similar recent application by stablecoin issuer Circle Internet Group. This strategic decision by cryptocurrency companies signifies a growing trend within the industry to embrace regulation, aiming to deepen their ties with traditional financial systems. Ripple CEO Brad Garlinghouse confirmed on X that the company is applying for a license with the U.S. Office of the Comptroller of the Currency (OCC), following earlier reports, underscoring Ripple’s commitment to operating within established regulatory frameworks.
A New Benchmark for Stablecoin Trust
Garlinghouse emphasized that if the OCC license is approved, it would establish a “new (and unique!) benchmark for trust in the stablecoin market.” This is because, with federal and state oversight, Ripple would be subject to rigorous regulatory scrutiny, adding a significant layer of security and credibility to its operations. Ripple’s commitment to compliance is long-standing, with its Ripple USD (RLUSD) stablecoin already regulated by the New York Department of Financial Services, indicating a proactive approach to meeting regulatory standards.
Following Circle’s Regulatory Path
Ripple’s decision to pursue a banking license comes shortly after Circle, the issuer of USDC, the second-largest stablecoin, also applied to the OCC. Circle’s application aims to create a national trust bank that would oversee its stablecoin reserves, further solidifying its position within the regulated financial landscape. These parallel moves by two major crypto firms highlight a collective industry effort to align with emerging U.S. regulations for the issuance and operation of dollar-denominated payment stablecoins, particularly as the US Senate recently passed the GENIUS Act, a bill designed to regulate stablecoin issuers under national bank oversight.
Ripple Bids for Federal Reserve Master Account
In addition to its banking license application, Ripple’s CEO Brad Garlinghouse announced that the company has also applied for a Master Account with the Federal Reserve. Gaining access to a Fed Master Account would grant Ripple direct access to the U.S. central banking system, a crucial step for any financial institution. Garlinghouse stated that this access would enable Ripple to hold its RLUSD stablecoin reserves directly with the Fed, providing an “additional layer of security to future proof trust in RLUSD.” This move signifies a deeper integration into the core of the traditional financial system.
Congress and Banks Embrace Crypto Integration
Garlinghouse also noted a significant shift in the regulatory and banking landscape, observing that “Congress is working towards clear rules and regulations, and banks (in a far cry from the years of Operation Chokepoint 2.0) are leaning in.” He referenced the past “Operation Chokepoint 2.0,” a conspiracy theory suggesting the Biden administration sought to cut off crypto from the financial system. Ripple’s application for the Fed Master Account was facilitated through Standard Custody, a crypto custody firm that Ripple acquired in February 2024, demonstrating their strategic efforts to build out compliant infrastructure.
XRP Reacts Positively to Licensing News
XRP, the native token of the XRP Ledger blockchain used by Ripple Labs for its products, experienced a positive market reaction following the news of Ripple’s banking license application. According to CoinGecko, XRP saw a gain of over 3% within the past day, trading at $2.24. The token began its ascent late on Wednesday, reaching a 24-hour peak of $2.27 around the time of Garlinghouse’s public announcement on X, before slightly cooling from its rally. This immediate price movement underscores investor confidence in Ripple’s efforts to achieve regulatory legitimacy and its potential impact on the XRP ecosystem.
Crypto’s Pursuit of Legitimacy and Traditional Finance Ties
Ripple’s applications for a U.S. banking license and a Federal Reserve Master Account are significant milestones in the broader cryptocurrency industry’s ongoing quest for legitimacy and deeper integration with traditional finance. By seeking to operate under stringent federal and state oversight, Ripple, much like Circle, is paving the way for a more regulated and trusted stablecoin market. This proactive engagement with regulators is crucial for fostering institutional adoption, enhancing investor confidence, and ultimately realizing the full potential of digital assets within the global financial system.
