Ripple CEO Brad Garlinghouse has argued that the biggest banks have a strong reason to embrace crypto and blockchain innovation, despite the apparent threat it poses to their current oligopoly. The CEO made his remarks during an interview on the Recode Decode podcast with Kara Swisher on May 20.
Throughout the interview, Garlinghouse underscored that Ripple’s approach is to work with financial institutions and regulators — with and not against the system. He contended that the idea of anonymous transactions that circumvent government and other authorities will not prevail, given global regulatory concerns about money laundering and terrorism financing.
Instead, the CEO — avowedly controversially, within the crypto context — stated:
“I don’t think banks […] governments will go away. Banks are applying a very important regulatory framework that I actually think is important for society. I personally believe that banks will continue to serve that role, they’re good at it […] I think this is a new set of technologies that they can benefit from to grow their business.”
With banks emphatically a part of the solution, in Garlinghouse’s view, he tackled both the advantages and possible resistances that arise at the intersection of the crypto sphere and traditional finance.
With XRP and Ripple’s technologies aiming to significantly reduce remittance costs for cross-border value transfer, the CEO noted that the responses will likely be different for regional banks and so-called tier one money-center banks.
For regional banks — using Wells Fargo as an example — he noted that the impetus to embrace the efficiencies offered by blockchain technologies and cryptocurrencies is ostensibly keener at the outset, claiming that:
“99 percent of banks love what we’re doing, because we’re democratizing something that’s controlled by a small number of banks, their competitors.”
In regard to tier one money-center banks, Garlinghouse conceded that their currently oligopolistic control of the banking sector faces a prospective threat from new technologies and capital flows — with Citibank, for example, reportedly making around “$8 billion in profit last year from other banks.”
However — given that KYC-compliant crypto-enabled transactions do provide a means of drastically reducing remittance costs and significantly lower friction — the CEO claimed that even the “biggest of the big” banks will arguably be pressed to tap into the technologies in order to prevent corporate goliaths such as Amazon from pre-empting them.
As reported, United States megabank JPMorgan Chase this fall announced it would be rolling out its own blockchain-powered native settlement digital asset, dubbed “JPM Coin.”