US Government Federal Register document mentions Ripple and XRP

Ripple and XRP named in Government document

The Bureau has continued to monitor the remittance transfer market since the publication of the Assessment Report and observes that most of these developments continue to progress. Examples include: The continued growth and expanding functionality of the Society for Worldwide Interbank Financial Telecommunication (SWIFT)’s ‘‘global payment innovation’’ (gpi) tracking product, which can increase the amount of up-front information available to sending institutions, and the expansion of the major payment card networks’ capacity to support cross-border payments; the continued growth of ‘‘fintech’’ nonbank remittance transfer providers and their further expansion into partnerships and other relationships with banks and credit unions, which allow such entities to tap into the closed network payment systems that nonbank remittance transfer providers have developed; and the continued growth and expanding partnerships of virtual currency companies, such as Ripple, which offer both a payments messaging platform to support cross- border money transfers as well as a proprietary virtual currency, XRP, which can be used to effect settlement of those transfers.

The worlds financial rails are changing, of that there is no doubt. Europe already has new systems in place whereby the Euro is moving around much faster between countries and banks. And ECB President Christine Lagarde has long been an admirer of Ripple’s products and yesterday again declared her backing for digital payments systems and digital assetts in general (It should be pointed out in this briefing she did not refer to either XRP or Ripple and we can assume the stablecoin she refers to is the Libra project as opposed to the current fake (alledgedly) ‘stablecoin’ USDT).

Fuller extract from US Government Federal Register document:

“As discussed above, the temporary exception permits insured institutions to disclose estimates (rather than exact amounts) of the exchange rate and covered third-party fees (and other amounts that have to be estimated because the exchange rate and covered third-party fees are estimated). With respect to the exchange rate, insured institutions and their trade associations have reported to the Bureau that because exchange rates fluctuate, sending institutions comply with the requirement to disclose exact exchange rates by ‘‘fixing’’ the exchange rate at the time a sender requests a remittance transfer. They do this by converting the funds to the applicable foreign currency up front themselves, or by using their correspondent bank or third-party service provider (instead of having an intermediary financial institution or the designated recipient’s institution perform the foreign currency conversion). As discussed in greater detail below in the section-by-section analysis of proposed §1005.32, insured institutions may face a number of hurdles with respect to converting funds to certain currencies upfront. In such cases, they may rely on the temporary exception with respect to the disclosure of the exchange rate.

With respect to covered third-party fees, insured institutions and their trade associations have told the Bureau that when banks and credit unions send remittance transfers using the serial method (where sending institutions do not have a correspondent relationship with all the financial institutions in the remittance transfer’s transmittal route), they cannot control or even know transaction fees imposed by another financial institution in the payment chain without having a correspondent relationship with that financial institution. As such, they rely on the temporary exception with respect to the disclosure of covered third-party fees.

Recent market developments and potential solutions. In the Assessment Report, the Bureau observed that the remittance market has undergone substantial change since the Rule became effective. The Assessment Report described several developments regarding the growth and incorporation of innovative technologies by providers of cross-border money transfers and other companies that support such providers.

The Bureau has continued to monitor the remittance transfer market since the publication of the Assessment Report and observes that most of these developments continue to progress. Examples include: The continued growth and expanding functionality of the Society for Worldwide Interbank Financial Telecommunication (SWIFT)’s ‘‘global payment innovation’’ (gpi) tracking product, which can increase the amount of up-front information available to sending institutions, and the expansion of the major payment card networks’ capacity to support cross-border payments; the continued growth of ‘‘fintech’’ nonbank remittance transfer providers and their further expansion into partnerships and other relationships with banks and credit unions, which allow such entities to tap into the closed network payment systems that nonbank remittance transfer providers have developed; and the continued growth and expanding partnerships of virtual currency companies, such as Ripple, which offer both a payments messaging platform to support cross- border money transfers as well as a proprietary virtual currency, XRP, which can be used to effect settlement of those transfers.

These developments suggest that in the future there may be means by which banks and credit unions could reduce their remaining reliance on estimates. These developments all share a fundamental similarity: They all apply elements of a closed network payment system to cross-border money transfers sent by banks and credit unions. As discussed in part II above, in a closed network payment system, a single entity generally exerts a high degree of end-to- end control over a transaction. This control generally facilitates standardization and uniformity over terms, conditions, and processes to which participants in a closed network payment system must adhere. That standardization and uniformity, in turn, can provide a great deal of certainty to all participants in such a system as to the terms and conditions that will apply to individual transactions within that system.

To the degree banks and credit unions increase their reliance on closed network payment systems for sending remittance transfers and other cross- border money transfers, the Bureau notes that this could result in greater standardization and ease by which sending institutions can quote exact covered third-party fees and exchange rates. The Bureau also believes that expanded adoption of SWIFT’s gpi product or Ripple’s suite of products could similarly allow banks and credit unions to know the exact final amount that recipients of remittance transfers will receive before they send the transfer.

However, based on comments that banks, credit unions, and their trade associations submitted in response to the 2019 RFI and the Bureau’s own market monitoring, the Bureau believes it is unlikely in the short-to-medium term that the developments described above will be able to fully eliminate reliance on the correspondent banking network as the predominant method for banks and credit unions to send remittance transfers. There are thousands of financial institutions worldwide that could receive remittance transfers. If, as noted above, the different approaches described above share the similarity of replicating some elements of a closed network payment system, they likely would need to enroll all or most of those financial institutions into their platforms to offer banks and credit unions up-front certainty when sending transfers for which they currently rely on the temporary exception. It may be costly, excessively time-consuming, or otherwise difficult to enroll all or even most of these institutions, especially the smaller ones. Accordingly, the Bureau believes that it is unlikely in the short-to-medium term for the developments discussed above to replace the correspondent banking system as the predominant means that banks and credit unions use to send remittance transfers.

See, e.g.,
Press Release, Ripple, Ripple Announces Strategic Partnership with Money Transfer Giant, MoneyGram (June 17, 2019), https:// www.ripple.com/insights/ripple-announces- strategic-partnership-with-money-transfer-giant- moneygram/; Sharon Kimathi,
PNC becomes first US bank on RippleNet, FinTech Futures (Aug. 29, 2019), https://www.fintechfutures.com/2019/08/ pnc-becomes-first-us-bank-on-ripplenet/.

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