Brad Garlinghouse, CEO of Ripple Labs, criticized Wall Street banking lobbyists who have tried to resist the move of his company and other crypto companies into the banking sector and into so-called Federal Reserve master accounts.
The crypto sector “should be held to the same standard” for anti-money laundering protections and other safeguards against illicit finance as traditional financial businesses, Garlinghouse said at DC Fintech Week on Wednesday, agreeing with traditional bankers on that point. But as a result, the industry “should have the same access to infrastructure as a Federal Reserve master account.”
“You can’t say one and then fight the other,” Garlinghouse said of demands that cryptocurrencies meet similar regulatory standards. “It’s hypocritical and I think we should all call them out for being anti-competitive in that sense.”
Federal Reserve master accounts would allow crypto companies more seamless integration into the U.S. financial system and direct access to central bank systems, a core benefit of traditional banking. But they have run into challenges getting the Federal Reserve to grant them that access, or even explain how it could be obtained.
Ripple recently applied for a master account through its subsidiary Standard Custody & Trust Co., a New York trust, at the same time the prominent crypto firm also applied for a federal banking charter from the Office of the Comptroller of the Currency in July.
Garlinghouse’s company, which has also recently delved into the field of stablecoin issuers, said banks are finally taking them more seriously after years of difficulties in which resistance from U.S. regulators made financial firms reluctant to participate.
“I had meetings yesterday in New York City, where banks that wouldn’t have talked to us three years ago are now reaching out and saying, how could we partner around this?” he said, confirming that those conversations involved Ripple’s stablecoin effort, known as RLUSD.
He said granting master accounts to crypto companies like Ripple and Circle will contribute to greater stability, regulatory oversight and risk mitigation.
“It’s been a little disappointing to see some of the traditional banks start to lobby against things like that,” Garlinghouse said.
