Ripple’s National Trust Bank Bid Faces Fierce Pushback From Banking Community

Key Points

1. The Independent Community Bankers of America (ICBA) has formally objected to Ripple Labs' application to charter Ripple National Trust Bank (RNTB), citing concerns over its proposed management of reserves for its RLUSD stablecoin.

2. ICBA argues that Ripple's plan to offer RLUSD with dollar redemptions and payment utility effectively recreates the role of a deposit-taking institution, which is legally restricted for trust banks.

3. ICBA warned that granting Ripple's charter could drain deposits out of the banking system and undermine regulatory oversight, as it would allow Ripple to offer deposit-like services without adequate supervision.

4. The group also highlighted Ripple's past regulatory violations, including a $125 million settlement over anti-money laundering lapses, as a reason to reject the application.

5. ICBA insists that the risks of Ripple's proposal outweigh any potential benefits, advocating for strict regulatory oversight to protect the banking system.