This article was first published on Insights – Ripple
Last July, the Office of the Comptroller of Currency (OCC) made a landmark decision allowing financial institutions to custody digital assets for customers and provide banking services for digital asset oriented businesses.
In the months following, the OCC has continued its progressive embrace of the crypto industry—just this week granting banks permission to contribute to public blockchains supporting stablecoins. While the guidance formally brings blockchain into the U.S. financial system, it’s important that banks understand how to build on the benefits of public blockchain networks to issue stablecoins.
The Case for XRP Ledger
The XRP Ledger (XRPL) is an open-source, decentralized blockchain technology that provides significant benefits for banks such as scalability, speed and cost. Financial institutions using it today leverage XRPL for its ability to fully settle transactions for fractions of a penny and in just 3-5 seconds—faster than any other major blockchain.
Built for payments, XRPL can also be used to support the issuance of stablecoins with a unique, fungible token functionality called Issued Currencies. Issued Currencies is designed to be the ideal stablecoin platform, providing simple but rich management functionality for the issuer that makes it easy to create, issue and manage any asset—including stablecoins.
Financial institutions can use Issued Currencies to issue stablecoins on the XRP Ledger. Using this functionality, an issuer simply needs to set up an issuing account and choose the configuration options desired for that particular stablecoin. Issued Currencies makes this process very straightforward, stable and highly secure to significantly lower business risks.
By taking the following steps, banks can issue stablecoins via Issued Currencies:
- Connect the issuing bank to the XRP Ledger. This involves establishing and connecting to an XRPL node, which can easily be done either on-premises or in the bank’s cloud infrastructure.
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Insights – Ripple