Banks have varying opinions on XRP, the cryptocurrency created by the company Ripple. Some major banks have partnered with Ripple and adopted their payment network RippleNet, which utilizes XRP for faster cross-border payments. However, other banks remain cautious or skeptical about the benefits of XRP and its role in the banking system.
What is XRP?
XRP is a cryptocurrency that was created by the company Ripple. The goal of XRP is to provide a fast, efficient and low-cost way for banks and payment providers to transfer money across borders. Here are some key facts about XRP:
- Released in 2012
- Powers the RippleNet payment network
- Designed for enterprise use, especially banks
- Conducts transactions in 3-5 seconds
- Transaction fees less than a penny
- Fixed supply of 100 billion XRP, with about 48 billion in circulation as of late 2022
- Managed by Ripple, not mined like Bitcoin or Ethereum
The idea is that banks can use XRP as a “bridge currency” when transferring cross-border payments on behalf of customers. This allows them to avoid the time and expense of using traditional correspondence banking.
How RippleNet Uses XRP
Ripple’s payment network RippleNet leverages XRP in the following way:
- A bank customer initiates a payment in one fiat currency, like US dollars.
- The bank converts the USD amount to XRP tokens.
- The XRP tokens are sent through RippleNet to the receiving bank in seconds.
- The receiving bank converts the XRP back into the destination fiat currency, like euros.
- The euro funds are deposited into the recipient’s bank account.
This allows cross-border payments to be settled extremely quickly. Ripple claims banks using RippleNet can process transactions in 3-5 seconds, compared to the typical 3-5 days for traditional banking transfers.
Cost Saving Benefits
Using XRP and RippleNet can substantially reduce costs for banks compared to traditional correspondent banking. The system cuts out the need for banks to maintain accounts in the currency of the receiving bank. It also reduces foreign exchange costs and fees charged between correspondent banks.
Ripple estimates that banks can save 30-70% on average per payment by using RippleNet and XRP. The company says hundreds of millions of dollars in banking costs could be saved each year.
Banks Using RippleNet and XRP
Over 300 banks and financial institutions are now customers of RippleNet, according to Ripple. Some major banks using RippleNet include:
- Santander
- Standard Chartered
- Axis Bank
- CIBC
- American Express
- MUFG Bank
However, some of these banks are using RippleNet without XRP. For example, American Express and Santander conduct transactions on RippleNet but do not use the XRP cryptocurrency. They only leverage the network for faster transaction settlement.
Banks known to be conducting transactions using XRP include:
- Cuallix (Mexico)
- SBI Remit (Japan)
- FlashFX (Australia)
- Ahli Bank of Kuwait
- Others in regions like EMEA and Southeast Asia
Reactions from Major Banks
Here are reactions to XRP and RippleNet from some top global banks:
Santander
“We believe that the use of Ripple’s distributed ledger technology, together with cryptocurrencies, will play a key role in the future of cross border payments, helping to improve speed, transparency and cost.”
Royal Bank of Canada (RBC)
“We are actively exploring use cases for crypto currencies and distributed ledgers. As an innovation partner to the ecosystem, we are running small experiments with different use cases to help us identify value-added solutions for our clients.”
MUFG Bank
“MUFG Bank joined RippleNet in order to provide better services to our customers. Because RippleNet shares the same values as MUFG Bank such as efficiency and innovation, we’re expecting a great synergy effect through this collaboration.”
Banks Still Cautious About XRP and Cryptocurrency
However, some major banks remain cautious or outright skeptical about XRP and cryptocurrencies in general. For example:
JPMorgan Chase
CEO Jamie Dimon has been a vocal critic, calling Bitcoin a “fraud” and saying cryptocurrencies will eventually blow up. JPMorgan has not adopted RippleNet and has focused on developing its own blockchain and crypto initiatives.
Citigroup
Has not joined RippleNet. Global head of FX said they are “open-minded but skeptical” regarding the benefits of using digital assets like XRP for cross-border payments.
Wells Fargo
Not a RippleNet customer currently. A research report stated cryptocurrencies like XRP are still not viable for mass adoption by major banks.
U.S. Bank
Has not adopted RippleNet. The bank’s chief innovation officer said they do not use cryptocurrency due to the wild volatility. They focus on more stable enterprise blockchain applications.
Why Some Banks Don’t Like XRP
There are a few key reasons why some major banks remain opposed or uncertain about XRP:
Price Volatility
As a traded crypto asset, XRP’s price is subject to wild swings based on speculation and investor demand. It rose nearly 50x in 2017 before crashing back down. Banks generally avoid exposure to volatile assets on their balance sheets.
Questionable Utility
Some banks believe they can realize most of the settlement speed and cost benefits of RippleNet without needing to adopt XRP. They think the cryptocurrency itself provides little additional utility.
Concerns Over Regulations
The regulatory status of cryptocurrencies remains uncertain. XRP faces ongoing lawsuits alleging it is an unregistered security. This legal uncertainty makes banks hesitant to adopt XRP.
Prefer Own Solutions
Major banks like JPMorgan and Citigroup are investing in developing their own blockchain and crypto solutions. They may be resistant to adopting an outside fintech vendor’s platform like RippleNet.
Examples of Bank Opinions on XRP
Here are some direct quotes illustrating the range of bank opinions on XRP and its adoption for payments:
| Bank | Quote on XRP |
| Santander | “From our point of view, XRP is clearly more efficient than other cryptocurrencies when it comes to payments.” |
| Citibank | “We continue to be open-minded about digital assets. But we remain somewhat skeptical about use cases beyond investment vehicles.” |
| DBS Bank | “Cryptocurrencies’ volatility and lack of scalability are major roadblocks to widespread business or consumer usage.” |
| U.S. Bank | “While we don’t use cryptocurrency currently, we’re always reviewing emerging technologies that could deliver value and convenience.” |
Conclusion: Mixed Opinions on XRP Adoption
In summary, banks have somewhat mixed opinions on adopting XRP and RippleNet for cross-border payments:
- Some major banks like Santander see clear benefits and have started using XRP.
- Others use RippleNet but not XRP, remaining uncertain of its advantages.
- Major U.S. banks largely remain skeptical or opposed to XRP and crypto.
- Volatility, regulation, and desire for own solutions are barriers to XRP adoption.
- More banks seem open to blockchain payments but hesitant on cryptocurrency.
As regulations evolve and RippleNet continues to develop, banks may warm up to XRP over time. But full mainstream adoption still appears to be a longer-term prospect at this point. The technology shows promise but skepticism persists around the specific role of XRP digital tokens in global banking.
