Analysts are looking at remarks from Ripple’s Heading of Banking Marjan Delatinne that suggest the company’s payment solutions aren’t currently attractive to banks because of a lack of regulatory context.
“Just to make clear, no banking institution is using that, because as you’ve probably heard about, the regulatory framework around the usage of digital assets is not very clear for banks. But payment service providers and some other financial institutions are less governed by these obligations,” Delatinne said recently according to Oracle Times.
As a front-runner in the crypto world, Ripple operates the XRP token and various payment and transaction processes enabled by its coin setup. XRP is traded, but it also opens gateways to quicker and more efficient payments.
There’s news that some payment services are adopting Ripple and that it may at some point in time rival or even replace replace the existing SWIFT (Society for Worldwide Interbank Financial Telecommunication) model that currently handles global interbank transactions. What’s abundantly interesting to some people looking at Ripple’s responses is that Delatinne actually has a long-standing history as a SWIFT staffer.
Crypto bulls are hoping that banks eventually find their way to replacing SWIFT with a coin-oriented or blockchain approach – while today’s payment systems are based on often labyrinthine and complex processes, using Ripple technology could greatly simplify the equation.
Proponents of Ripple payment systems make the analogy to the telecom industry – before universal VoIP, telephone systems had to be patched together in complicated ways. Eventually, the common protocol emerged, and now we have, more or less, one big network.
In the banking world, each transaction has to jump through a lot of hoops to get from one end of the deal to the other. Ripple and other crypto services would expedite these payments by making it much easier to process transactions through a particular pipeline.
One example is Ripple’s xRapid system that promotes liquidity by lowering liquidity costs. Ripple characterizes it in internal documents this way:
“xRapid is for payment providers and other financial institutions who want to minimize liquidity costs while improving their customer experience. Because payments into emerging markets often require pre-funded local currency accounts around the world, liquidity costs are high. xRapid dramatically lowers the capital requirements for liquidity.”
Delatinne’s comments are not the first time we have heard this kind of argument – for a long time, those with a stake in crypto have been complaining that banks “just don’t get them” – and banks have been nervously hedging around comments about instability and volatility.
As some point out, banks and blockchain processes are from different worlds – but that doesn’t mean that they can’t get along. Maybe we need a match-maker to come in and introduce central banking and crypto to each other, in a positive way that doesn’t involve dark money or any of the skullduggery we associate with banks in places like Iran and Venezuela. Crypto investors believe that coins can and should be a force for good – new regulatory structures could help make that happen.
