In order to assist stablecoin issuers, Ripple urges the Fed to update payment account regulations. It contends that specific changes might increase dollar dominance, lower systemic risk, and hasten the integration of compliant digital assets into the American financial system.
As businesses look for more transparent access to the U.S. payment infrastructure, regulatory involvement surrounding digital assets keeps growing. On February 6, Ripple Labs Inc. sent a letter of comment to the Federal Reserve, requesting changes to the proposed Reserve Bank Payment Account structure to better assist digital payment processors and stablecoin issuers.
Ripple proposes four major changes to the Payment Account prototype in its letter: granting permitted payment stablecoin issuers access to the limited-purpose Discount Window; allowing Interest on Reserve Balances to prevent reserve concentration within commercial banks; substituting a proportional asset-based threshold for the $500 million overnight cap; and introducing a pre-funded ACH settlement model to eliminate credit risk.
Stuart Alderoty, Chief Legal Officer at Ripple, stated, “The PA prototype provides a vital avenue for Permitted Payment Stablecoin Issuers (PPSIs) to eradicate counterparty risk, the ‘gold standard’ for reserve safety, and the ultimate fulfillment of the stability objectives of the GENIUS Act by holding 1:1 reserves directly at a Federal Reserve Bank.” He noted:
The cryptocurrency XRP and Ripple’s stablecoin, RLUSD, which support these solutions, enable Ripple and its clients to influence the contemporary financial system.
Alderoty went on to say: “The RPD [Ripple Payments Direct] architecture is designed to support a diverse range of currencies, tokens, and financial use cases, guaranteeing transparency and instant settlement regardless of the underlying asset being moved, even though XRP—the token native to the XRP ledger—can be used as a powerful liquidity tool to enable quick and inexpensive transfers.”
As it moves beyond its software-only function, Ripple has also formally applied for federal banking and payment access permissions. The Office of the Comptroller of the Currency (OCC) granted conditional permission for the establishment of Ripple National Trust Bank in December of last year after the company submitted an application for a National Trust Bank Charter on July 2.
Instead of holding separate state licenses, the charter enables Ripple to operate nationally under a single federal framework, meet federal stablecoin issuance standards under the GENIUS Act, and provide institutional digital asset custody.
Through its subsidiary, Standard Custody & Trust Company, the cryptocurrency company has also submitted an application for a Federal Reserve Master Account; this request is still being considered. A Master Account would enable the Federal Reserve to hold RLUSD reserves and give direct access to Fedwire and FedNow.
Ripple’s conditional certification from the OCC places it among the companies looking for further integration with U.S. payment rails, even though the Federal Reserve reviews these applications on its own and has typically restricted access for crypto-native businesses.
