The crypto community has been in an upbeat mood for the past few days due to a recent decision made by the U.S. Office of the Comptroller of the Currency. The decision, encapsulated in an interpretative letter that the OCC sent to an unidentified bank, stated that nationally authorized banks and savings institutions can now offer crypto custody services to their clients. This is also a decision that opens the door for these institutions to offer crypto loan and participation services in the future.
As expected, the news was happily reciprocated by the crypto market, with the resurgence led by none other than Bitcoin, the world’s largest cryptocurrency. In fact, Bitcoin was quick to break its immediate resistance and at the time of writing, it was well above $ 9,600 on the charts.
Ripple and the XRP community were not far behind when it came to celebrating development. But should they really? More importantly, are their reactions representative of those expressed by the rest of the community? The way to answer this question perhaps lies in identifying what the OCC decision really means.
A fork on the road behind
Sure, the decision means that banks can offer crypto custody services and can offer long-term lending and participation services, but in its most basic and primitive form, the development in question is a validation of Bitcoin, and by extension, the Cryptocurrency market credentials.
Bitcoin validation. A cryptocurrency that was conceived in 2009 with the intention of replacing the existing financial and banking infrastructure. A cryptocurrency whose advocates have vocally and repeatedly proposed the idea of ”Be your own bank.” The fact that such a cryptocurrency has received the go-ahead as publicly is as important as anything this year.
However, “replace existing financial infrastructure,” “Be your own bank,” is that what Ripple has been saying all these years? Well, no. In fact, Ripple’s strategy has been more conciliatory. Rather than replace the prevailing financial infrastructure, Ripple has leaned toward using the technical advantages that blockchain and crypto provide to reform the system. Wondering why Ripple has been happy to work with financial institutions like banks? Well this is the reason.
Ergo, it’s no surprise that many expect Ripple, and by extension XRP, to be the biggest winners of the ad. Now Ripple and XRP may finally be the solution to a $ 1 trillion problem, some say. No wonder the community has been quick to welcome and celebrate the OCC’s decision. That and the fact that Brad Garlinghouse’s crypto custody prediction from a few years ago seems to have come true.
But think about it: Ripple celebrates the announcement of crypto custody services? Well, it could, because as noted above, your journey has not been the same as the rest of the encryption community. In the eyes of many, Ripple is a compromise effort, a company that is more willing to negotiate with financial institutions than to promote the idea of cryptocurrencies.
Hiccup on the road ahead
That is not all, however. For years, Ripple has been plagued with allegations that suggest the XRP ecosystem is too centralized, despite executives like David Schwartz claiming the XRP ledger is more decentralized than Bitcoin and Ethereum. In fact, a BitMEX research report released a few years ago had stated:
“… The ripple system seems centralized for all practical purposes and therefore perhaps lacks interesting technical features, such as resistance to censorship, that coins like Bitcoin may have.”
Now if there is any truth to these allegations it is not the focus of this article. However, what is evident is the fact that centralization concerns persist. And they have persisted for a while. And that is inappropriate for any cryptocurrency ecosystem.
Finally, there is the question of what XRP is. As of now, XRP status is still being litigated in the United States. The answer to “What is XRP?” It’s still in the air. In such circumstances, is it perhaps too premature to hold an announcement that you might not even come to play? Think about it: What if XRP is determined to be a security? Well then you can forget about the national banks that offer custody services for XRP.
In conclusion, are Ripple and the XRP community prematurely cheering on the OCC decision? Well, for an ecosystem that supposedly revolves around a cryptocurrency, the answer is yes. But look, that’s the question: Ripple’s trajectory in recent years has not been the same as that of the rest of the community. Ripple and the XRP community are right to celebrate the development, but there is a good argument in favor of it not being representative of the rest of the community.
On the other hand, perhaps anyone who has welcomed the news while talking about “Be your own bank” is guilty of that.
That and the fact that the courts are still unclear about what XRP is suggests that perhaps these celebrations should have an asterisk.
