The State Bank of Pakistan (SBP) has recognized the promising work carried out by Ripple and its cryptocurrency XRP in its 2022 financial stability report. Despite regulatory uncertainties and crackdowns on cryptocurrencies in some regions, the SBP praised Ripple and XRP for their contributions to cross-border payments.
The SBP acknowledged the benefits that crypto assets offer but also highlighted some potential risks associated with these assets, including money laundering and terrorism financing. It made reference to the infamous Silk Road darkweb marketplace that used cryptocurrencies for illicit trades. Additionally, the report mentioned the collapses of the FTX empire and Terraform Labs’ projects, which caused the entire crypto market to plummet.
However, the SBP commended Ripple and XRP for their efforts in an environment where banks have yet to recognize any crypto asset as a legal tender. This recognition indicates the level of acceptance and acknowledgment of the role of crypto, particularly XRP, in cross-border transactions.
It is worth noting that the SBP’s position is in contrast to the global acceptance of stablecoins. According to a study shared by Alex Gladstein, Chief Strategy Officer at the Human Rights Foundation, stablecoins settled over $11 trillion on-chain in 2022, just shy of the $11.6 trillion payment volume recorded by Visa. In comparison, PayPal processed only $1.4 trillion in volume.
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Ripple’s contributions to cross-border payments have also been commended by Bank of America. In a report titled “The Future of Payments,” Bank of America highlighted Ripple’s solution, which leverages blockchain technology to streamline cross-border payments. The report emphasized the real-time visibility and reduced number of intermediaries involved in Ripple’s payment process, which lowers the cost and risk of errors.
Ripple’s on-demand liquidity (ODL) feature also enables banks to support cross-border payments without the need to hold foreign currency in a nostro account, resulting in faster settlement at a lower cost. Ripple’s official website reveals that more than 300 customers across over 40 countries and six continents process over $10 billion in transactions each day using its platform.
While the recognition from the SBP and Bank of America validates Ripple’s efforts, it’s important to note the risks associated with crypto assets highlighted by the SBP. Money laundering and terrorism financing remain significant concerns, and regulatory frameworks are needed to address these risks effectively.
In conclusion, the State Bank of Pakistan’s acknowledgement of Ripple and XRP’s promising work highlights the growing acceptance and recognition of cryptocurrencies in cross-border transactions. However, it is crucial to address the risks associated with crypto assets, including money laundering and terrorism financing, to ensure a secure and regulated crypto ecosystem.
