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- The promising work of Ripple and XRP was recognized by the State Bank of Pakistan (SBP) in a 2022 financial stability report.
- The report also highlights some risks associated with crypto assets including money laundering and terrorism financing.
Amid the backdrop of regulatory uncertainties and crypto-related crackdowns within some selected regions, the State Bank of Pakistan (SBP) has lauded the “promising work” of Ripple and XRP in its 2022 financial stability report. According to the report, crypto assets provide innumerable benefits that require the best conditions to thrive.
While crypto assets offer some benefits, the realization of these benefits still requires enabling pre-conditions. Furthermore, while some encouraging work is being conducted to support cross-border payments (e.g., through Ripple’s XRP), it still is only on a minuscule level compared to the volume of cross-border payments globally.
This auspicious compliment is just the icing on the cake for the fast-evolving crypto landscape which has been severally acknowledged by industry key players. The comment from SBP also indicates the level of acceptance and recognition of the role of crypto or XRP in cross-border transactions.
SBP Mentions Some Notable Risks Associated with Crypto
Notwithstanding, SBP issued a bit of caution to market participants, highlighting some potential risks in crypto. According to them, the asset class can be potentially used for terrorism financing and money laundering. With this, a reference was made to the infamous Silk Road darkweb marketplace that facilitated illicit trades using cryptos. The report further mentioned the recently collapsed FTX empire as well as the failed Terraform Labs’ projects that sent the entire crypto market plummeting as the best possible scenario for the volatile nature of the crypto ecosystem.
Regardless, the effort of Ripple and XRP in an environment where banks have not yet recognized any crypto asset as a legal tender deserves commendations according to the report.
It is reported that the position of SBP is in contrast to the global acceptance of cryptos, especially stablecoins. A study shared by Alex Gladstein, Chief Strategy Officer at the Human Rights Foundation disclosed that stablecoin settled more than $11 trillion on-chain in 2022. This is a little short of the $11.6 trillion payment volume recorded by Visa. In comparison, PayPal only managed $1.4 trillion in processed volume.
Ripple Commended by Bank of America
Recently, Bank of America, one of the largest and renowned financial institutions in the world also commended the contribution of Ripple in cross-border payments in a report titled “The Future of Payments.”
Ripple offers a solution that leverages blockchain technology to streamline cross-border payments. It allows banks to provide real-time, end-to-end visibility into the status of a payment, from the moment it is sent until it is confirmed. It also reduces the number of intermediaries involved, which lowers the cost and risk of errors.
According to the report, Ripple can assist customers in accessing new markets in addition to offering new services including on-demand liquidity (ODL). It is important to note that Ripple’s ODL enables banks to support cross-border payments without the need to hold foreign currency in a nostro account. In this case, banks can offer a faster settlement at a cheaper cost. Ripple’s official website discloses that more than 300 customers across over 40 countries and six continents process more than $10 billion in transactions each day using its platform.
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