Earlier today, a tweet by @DiepSanh brought up a conversation as to why banking institutions are not using xRapid. The tweet explained that banking institutions were not using xRapid due to regulatory uncertainty when it comes to digital assets and that only payment service providers were using the blockchain based solution for cross-border payments. The tweet also included a 1.38 minute undated video clip of Ripple’s Global Head of Banking, Marjan Delatinne, stating the same.
The tweet by @DiepSanh (Stephen Diep) can be found below.
In the video, Ms. Delatinne states the following:
This product [xRapid] is live now…just to make it clear…no banking institution is using that because as you probably heard about it, the regulatory framework around the usage of digital assets is not very clear for banks.
But payment service providers and some other financial institutions are least governed by these obligations…
Why Banks Would be Hesitant to Use xRapid
As stated in the video by Ripple’s Global Head of Banking, all banks around the globe have to adhere by certain regulations and laws set by the particular jurisdictions they operate in. Banks also abide by the direction provided also by the Central Banks of the same jurisdictions.
Until Global Central banks – and their corresponding governments – issue proper regulatory direction with regards to digital assets, xRapid will probably only be used by payment service providers. These type of firms are private entities that only offer remittance services.
Central Bank Digital Currencies (CBDCs)
However, there is also the slight possibility of global Central banks creating their own internal fiat backed digital currencies to ease cross border transactions.
xRapid uses XRP to source instant liquidity for cross border payments. Using the digital asset minimizes the costs incurred during regular foreign exchange conversions that are found in traditional cross-border payments.
There is also the aspect of speed as xRapid transactions have been shown to take 2 – 3 minutes. Similar transactions using SWIFT take between 2 to 3 days.
To date, only 3 financial institutions have confirmed using xRapid: Mercury FX, Cuallix and Catalyst Corporate Federal Credit Union.
What are your thoughts on the idea that banking institutions are not using xRapid due to regulatory uncertainty with regards to digital assets? Please let us know in the comment section below.
Disclaimer: This article is not meant to give financial advice. Any additional opinion herein is purely the author’s and does not represent the opinion of Ethereum World News or any of its other writers. Please carry out your own research before investing in any of the numerous cryptocurrencies available. Thank you.