In recent months, the global cryptocurrency market has demonstrated remarkable growth both in scale and sophistication. The US Congress has designated July 14–18 as "Crypto Week," during which three key bills related to digital assets are scheduled for a vote.


The three bills include:

  • The Genius Act, which establishes a regulatory framework for stablecoin issuers and reserve requirements;
  • The Clarity Act, which clarifies regulatory jurisdiction over different types of digital assets;
  • The CBDC Surveillance Halt Act, which prohibits the Federal Reserve from issuing a central bank digital currency (CBDC).

The Genius Act, having already passed the Senate, is widely expected to clear the House in this session. Prediction market platform Polymarket currently places the probability of final passage at 95%.


Bitcoin, which had been trading sideways through early July, surged 13% in just four days after July 8, reaching a new all-time high of $123,000 on optimism ahead of Crypto Week. For the week ending July 10, Bitcoin ETFs saw net inflows of $1.22 billion, marking the highest weekly inflow since November 2024.


Alongside Bitcoin’s record high, XRP also posted notable gains. After trading in a narrow $2 range for four months, XRP jumped 31% in the past week to surpass $3. This rally followed Ripple Labs’ application to the US Office of the Comptroller of the Currency (OCC) for a trust bank charter.


Ripple Labs, Circle Among Crypto Firms Applying for Trust Bank Charters

In addition to Ripple Labs, Circle—the issuer of the USDC stablecoin—has also applied to the OCC to establish a trust bank. Trust banks specialize in asset custody and settlement services, but typically do not accept deposits and are therefore not insured by the Federal Deposit Insurance Corporation (FDIC). Unlike commercial banks, they do not offer deposit or lending services, making the licensing process less complex and time-consuming.


If Ripple Labs and Circle secure trust bank charters, they will be able to custody digital assets directly, without relying on third-party custodians, and will be subject to federal and state oversight. This is expected to enhance market confidence in their stablecoin offerings.


Ripple Labs Applies for Federal Reserve Master Account

More significant than the trust bank charter is Ripple Labs’ application for a master account with the Federal Reserve Board. Institutions with a trust bank charter are eligible to apply for a Fed master account, which enables direct access to the Fedwire Funds Service and FedNow—critical real-time settlement systems for high-value payments and interbank clearing—without the need for intermediary banks.


Ripple Labs recently submitted its master account application via Standard Custody, a crypto asset custodian licensed by the New York State Department of Financial Services (NYDFS), which it acquired in 2024.


The Federal Reserve retains discretion to approve or deny master account applications, and has historically rejected such requests from crypto firms. The Fed is currently engaged in litigation with crypto-focused custodian Custodia Bank over this issue, with a ruling expected soon.


Potential Impact of Master Account Approval

If Ripple Labs’ master account application is approved despite these hurdles, the company will be able to deposit RLUSD stablecoin reserves directly at the Fed and settle transactions instantly without intermediary banks. Previously, crypto firms and other non-financial companies have relied on commercial banks for settlement, incurring high costs and delays.


Direct access to the Fed’s payment network would enable Ripple Labs to transact with financial institutions worldwide, potentially giving it a competitive edge in the cross-border payments market. Banks and funds could use RippleNet, Ripple’s cross-border payment platform, without legal risk, likely accelerating institutional adoption and participation in the Ripple network.


Securing a master account could elevate Ripple Labs’ role in interbank and cross-border payments to a new level, posing a direct challenge to traditional payment systems that are slower and more costly. The entry of crypto firms into the cross-border payments market via trust bank charters and master accounts could mark a turning point for the global financial settlement infrastructure.


Financial institutions should consider the possibility that blockchain-based cross-border remittance systems may be adopted more rapidly than expected, and that cash-like assets such as deposits and foreign exchange could be quickly tokenized and transacted on-chain. Anticipating these shifts, each institution must strategize to maintain competitiveness in a rapidly evolving landscape.


(Mi-seon Lee, former Head of Research, Hashed Open Research)


jsjeong@yna.co.kr

(End)


<Copyright (c) Yonhap Infomax. Unauthorized reproduction and redistribution, as well as AI training and utilization, are strictly prohibited.>

All content has been translated by AI.
Copyright © Yonhap Infomax Unauthorized reproduction and redistribution prohibited.