- Even before JP Morgan, banks such as UBS, Deutsche Bank, Santander, and BNY Mellon had revealed plans to launch bank-based cryptocurrencies.
- Ripple CEO, Brad Garlinghouse, says that bank-based crypto will be a fallacy and XRP is the best way to bring payment systems into the modern era.
As reported by FX Street, JP Morgan is releasing its cryptocurrency. This is not the first time that a bank released its crypto as back in 2016, UBS, Deutsche Bank, Santander, and BNY Mellon revealed plans to launch Utility Settlement Coin (USC).
Ripple CEO, Brad Garlinghouse, already made his views against bank-backed crypto clear:
“A bank-issued digital asset can only really efficiently settle between the banks who issued it. Then, two scenarios can play out. Scenario one: all banks around the world put aside competitive and geopolitical differences, adopt the same digital asset, agree on its rules, and harmoniously govern its usage. Fat chance. Scenario two (the more likely scenario): banks not in the issuing group issue their own digital assets with their own sets of rules and governance.
We’re kinda seeing this already, as the FT points out, with Citi’s Citicoin and Goldman Sachs’ SETLcoin. The result would be an even more fragmented currency landscape than what we have today. If banks of different digital asset groups want to settle trades with one another, they’ll have to make markets between their unique digital assets or trade between their digital assets and a common fiat currency. What a mess!
The second big problem with the ‘utility settlement coin’ is it seems it’ll be backed by a basket of currencies. Once backed by cash, it’s no longer an asset; it’s a liability. Trading liabilities then ultimately requires moving cash across borders, re-creating today’s system but adding more friction!”
He also stated as to why Ripple is the asset which will bring payment systems into the modern era:
“We strongly believe banks need an independent digital asset to enable truly efficient settlement and we believe XRP is best positioned for that role. It goes back to the fundamentals of what makes digital assets unique and special – they’re universal currencies, meaning anyone can use them as units of value anywhere in the world. That universality gives digital assets global reach and the ability to settle much faster than traditional assets.
Compared head to head with other independent digital assets (like Bitcoin or Ether), XRP settles the most efficiently cross-border, in just seconds. In fact, we’ve run tests with global banks to prove XRP can lower liquidity costs for cross-border trades.”