Ripple’s decision—announced in July on social media by the company’s chief executive, Brad Garlinghouse—mirrors similar moves by Circle and BitGo. Analysts opine that the collective pursuit of a national charter is aimed at building credibility and deepening assimilation into Main Street.
But are the initiatives anything other than digital lipstick? Although national trust banks are federally chartered, they cannot accept deposits or make loans, unlike conventional banks. Instead, they can custody assets, oversee client funds, and overlay relevant financial products, suggesting the move is more about vertical integration and reducing reliance on third parties. Nevertheless, these developments serve as a wake-up call for the traditional banking sector. Under a charter, digital asset firms would benefit from faster settlement times and lower costs, circumventing intermediary banks.
For some, the encroachment by blockchain-based digital firms should be seen as complementary. “Blockchain-driven entities are no longer disruptors on the fringes, but legitimate custodians of value capable of coexisting with and complementing established banking systems,” says Tim Chen, global head of strategy at Mantle, a blockchain financial technology firm. Even so, Chen warns that conventional banks will have to accept that tokenization is rapidly changing the narrative.
“What once required intermediaries and lengthy settlement chains can now be achieved with a smart contract and a stable, regulated digital token,” he adds.
The charter applications will need to be approved by the Office of the Comptroller of the Currency, the apex banking regulator in the US. Ripple also seeks a Fed Master account that would provide access to the Federal Reserve’s payment infrastructure. If granted, Ripple would be able to hold reserves of RLUSD, its native stablecoin, with the central bank. Circle has made a similar application. Earlier this July, Bluechip, the stablecoin rating agency, attached its top ranking to RLUSD.
President Trump’s crypto-friendly policies have buoyed the increasingly buccaneering moves by crypto firms. In July, the administration signed the GENIUS Act, which regulates stablecoins, into law. Two further crypto laws, namely the Clarity Act and the Anti-CBDC Surveillance State Act, remain pending.
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