While cryptocurrencies have come a long way in the public eye, they are still treated with a lot of scepticism and sideways glances by a number of sectors in today’s modern world. One such tepid relationship is between digital currencies and the banking world.
In saying that, these two sides have come together a lot in only a few short years. The relationship started as one that had each side looking to derail one another whereas today there is a lot more common ground.
Banks are looking to modernise and have started leaning on blockchain technology and even cryptocurrencies to achieve this. At the same time, cryptocurrencies have lessened their anarchist views and are trying to become a part of a new modern banking system.
However, the banking world still sees cryptocurrencies in general as a bad word. Many, like JP Morgan, have entered into the blockchain space and are happy to create their own cryptocurrency-like tokens, but are not ready to lean on decentralized ones, or even purpose-built tokens like XRP, from Ripple.
Not a dirty word
During a recent interview with CNN, Ripple CEO Brad Garlinghouse explained that “once regulators understand you’re not circumventing regulatory frameworks [with cryptocurrencies] they get very comfortable very quickly.”
Garlinghouse said that a person at the World Economic Forum in Davos told him that “crypto is still a bad word here.” This is the attitude in traditional finance, and so, a big part of his work is explaining to bankers how crypto can solve real-world problems while staying compliant:
“A lot of what I am doing is meeting with regulators, meeting with very senior people at banks and explaining to them how crypto can be used — specifically XRP — can be used to solve a real problem, not to circumvent regulation. Once people understand that, they very quickly become disarmed, it’s no longer a bad word.”
Ripple still hunting for banks
Ripple has become a company that has actively sought out banks in order to introduce them to the world of cryptocurrency. As of October 2019, Ripple had a reported 168 customers comprised of 118 banks, 16 remittance/money transfer firms, seven foreign exchange companies, two cryptocurrency exchanges, 11 payments providers, six software and technology firms, and eight others, including international auditing and professional services giant Deloitte.
This model is to try and introduce these institutions to the world of cryptocurrencies and to show their benefit is worthwhile, and not as dangerous or risky as many feel.