In a report recently released by the State Bank of Pakistan (SBP), Ripple and its cryptocurrency XRP were acknowledged for their promising potential in the global payment ecosystem. The SBP recognized the benefits that crypto assets can offer, but also highlighted the need for enabling pre-conditions to fully realize these benefits.
The report stated that while some encouraging work is being conducted to support cross-border payments, specifically through Ripple’s XRP, the current usage of XRP in this context is still relatively minuscule compared to the volume of cross-border payments worldwide. This acknowledgment by the SBP signifies a broader recognition of the evolving financial landscape and the role that cryptocurrencies like XRP can play in facilitating cross-border transactions.
However, it is important to note that the SBP maintained a cautious stance towards cryptocurrencies in general. The report highlighted the inherent risks associated with crypto assets, such as their potential use in money laundering and terrorism financing. It also referenced past incidents such as the Silk Road case, a now-defunct dark web marketplace, as well as the collapse of the FTX crypto exchange and the disintegration of Terraform Labs’ projects, underscoring the volatile nature of the crypto industry.
Despite these caveats, the SBP’s acknowledgment of XRP’s capabilities is noteworthy, especially considering that the bank has not recognized any cryptocurrency as legal tender. It reflects a recognition of the potential benefits that cryptocurrencies can bring to the global payment ecosystem, while also emphasizing the need for caution and regulation to mitigate associated risks.
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Interestingly, the SBP’s view stands in contrast to the global traction gained by cryptocurrencies in recent times, particularly stablecoins. A study highlighted by Alex Gladstein, Chief Strategy Officer at the Human Rights Foundation, revealed that stablecoins settled over $11 trillion on-chain in 2022. This volume dwarfed the payment volumes processed by traditional financial institutions such as PayPal and even approached the volumes settled by Visa. This highlights the significant market share that stablecoins have gained and their potential to disrupt traditional payment systems.
Turning to XRP specifically, its price has experienced some volatility following Ripple’s victory against the US Securities and Exchange Commission. Currently, XRP is facing resistance at the 200-day EMA, and if a breakout succeeds, the next target would be $0.5540.
The recognition of Ripple and XRP by the SBP contributes to the ongoing dialogue surrounding the integration of cryptocurrencies into mainstream finance. Governments and financial institutions around the world are increasingly acknowledging the potential benefits and challenges associated with cryptocurrencies. As the digital asset space continues to evolve, it will be crucial for regulators and industry players to strike a balance between enabling innovation and safeguarding against risks.
In conclusion, the SBP’s praise of Ripple and XRP in their financial stability report demonstrates a growing recognition of the potential that cryptocurrencies hold in the global payment ecosystem. However, it is important to approach these developments with caution and address the associated risks to ensure the long-term stability and security of the financial system.
