It appears that dear Mr. Ripple’s ambitious venture to establish a national trust bank has met with a most spirited opposition from the venerable community of bankers who view it as a scandalous threat to the sanctity of regulation, the stability of our cherished financial system, and the neat boundaries between distinguished institutions.
The Collision of Newfangled Bank Fancies with Old-World Finance
The illustrious Independent Community Bankers of America (ICBA), a venerable society representing no less than 5,000 humble community banks scattered across the nation, has produced a formal objection-a document of no small length and considerable moral outrage-to Ripple Labs’ audacious application to be granted the lofty title of Ripple National Trust Bank (RNTB). In a letter most fiery, addressed to the esteemed Office of the Comptroller of the Currency (OCC) on the 4th of August, the ICBA contended that Ripple’s scheme to manage reserves for its RLUSD stablecoin strays perilously far from the original purpose of trust banks and seems to imitate the functions that proper banking institutions have long held sacred.
This scheme, they argue, could very well drain deposits from the entire system-as if one bank’s misdeeds might turn the tide against all.
By offering RLUSD with promises of dollar redemptions and utility in payments, the group insists that Ripple would be, in essence, recreating the role of a deposit-taking institution-despite the legal restrictions placed upon trust banks to do no such thing without proper authorization.
ICBA alleged that Ripple’s proceedings openly flout the regulatory intent, asserting: “Ripple Labs and RNTB appear to be skirting the boundaries of depository functions, all without securing a full bank charter.” They further declare that the OCC is turning a blind eye, seemingly permitting stablecoin issuers to enjoy the advantages of full-service bank powers while evading the strict requirements such privileges normally entail. In their words, “Stablecoins like RLUSD, which function nearly like deposits-allowing transfers, purchases, and dollar redemptions-stand apart remarkably from the trust bank’s fiduciary and custodial roles.””
The ICBA also took a moment to chide the OCC for neglecting the proper procedures mandated by the Administrative Procedure Act when expanding trust bank authorities to include activities that have never been traditionally trust functions, such as issuing stablecoins.
Apart from the legal and procedural concerns, the venerable bankers prudently cast their eyes on the Pandora’s box of digital asset risks-fraud, money laundering, cyber villainy, and the great challenge of safeguarding consumers. They reminded all that Ripple’s history is not without blemish: settlement over anti-money laundering lapses and a hefty $125 million penalty for securities violations stand as testament that not all that glitters in the digital realm is trustworthy.
To grant RNTB a national trust bank charter, they warn, would be to unwittingly weaken the very foundations of our financial stability by allowing a disreputable outsider to perform deposit-like services without the requisite oversight-endangering consumer protections and the integrity of our venerable banking sector.
Some enthusiasts within the blockchain circles argue that such innovations could modernize society’s financial engagements, but the ICBA insists the peril surpasses any possible benefit-unless we are prepared to accept a salad of chaos, served with a side of regulatory chaos. 😏
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2025-08-07 05:58