- Ripple’s charter bid sparks debate over financial innovation and regulation.
- Community banks fear Ripple’s stablecoin could bypass traditional banking safeguards.
- Ripple emphasizes compliance while challenging traditional banking systems and models.
Ripple’s recent push for a national trust bank charter has caused quite a stir within the financial sector, particularly among community banks. According to a post shared by Pumpius (@pumpius) on X, the Independent Community Bankers of America (ICBA), which represents over 5,000 small banks, has formally urged the Office of the Comptroller of the Currency (OCC) to reject Ripple’s application for a banking license.
According to the ICBA, Ripple’s RLUSD stablecoin mimics deposit-like services but without the regulatory protections typically afforded to traditional deposits. They caution that this has the potential to destabilize the banking system and endanger consumers.
Ripple responds to these arguments by saying that RLUSD is held 100 percent in cash and U.S. Treasury securities, which makes it stable. The company stresses that RLUSD is not a retail deposit product but a custodial service, skipping the traditional banking patterns.
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Ripple has also requested a Federal Reserve Master Account to store reserves in response to concerns, to make RLUSD fall under the oversight of the OCC. In such a way, Ripple believes that it will be able to deal with the regulatory issues and offer more transparency to the financial world.
🚨 ICBA just dropped an official letter urging the OCC to reject Ripple’s national trust bank charter.
They claim RLUSD mimics deposits, Ripple bypasses regulations, and its past AML missteps make it unfit for banking. 👇🧵 pic.twitter.com/kDSRrESYJv
— Pumpius (@pumpius) August 6, 2025
The ICBA also indicates the history of problems Ripple had with anti-money laundering (AML) compliance, citing fines by the DOJ and SEC. Nevertheless, Ripple claims that its activities meet the contemporary BSA/AML standards that are tested and audited on a regular basis.
Small Banks’ Concerns Over Ripple’s Disruptive Potential
According to Pumpius, ICBA’s objections reflect a broader fear among small banks about the rise of alternative financial systems. These institutions fear that Ripple’s RLUSD stablecoin could take business away from them, further disrupting the established financial infrastructure.
However, Ripple’s fundamentals do not aim to replace conventional banking but rather to supplement it using an efficient and secure financial system. By offering a custodial asset rather than a loan-based product, Ripple believes it is creating an alternative financial model that still adheres to regulatory standards.
Ripple continues to emphasize its commitment to compliance, asserting that RLUSD and XRP are designed to offer transparency and security. The company aims to push innovation while protecting the consumer and regulating itself.
Ripple Navigates a Changing Regulatory Landscape
Ripple’s application for a national trust bank charter coincides with growing institutional support for digital assets. With Rodney Hood at the helm of OCC, the crypto-related initiatives are being allowed to enter into the traditional finance environment, representing a nod toward a more open embrace of blockchain technology in the world of finance.
Ripple’s efforts mirror a broader trend, with companies like Circle and Anchorage pursuing similar charters. Such increasing regulatory tolerance of digital assets is aiding Ripple and its mission to transform the financial world.
Despite resistance from the ICBA, Ripple is pressing forward, believing that its model offers a more efficient and transparent alternative to traditional banking. Â The company believes its model offers a more efficient and transparent alternative to traditional banking, positioning itself as a leader in the future of digital finance.
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