Regulations & Compliance Update: U.S. Treasury, CSBS, and Canadian Senate


Ripple Labs believes that ensuring robust security, consumer protections, and safety are crucial as we move toward improving payment systems. To this point, we remain engaged with regulators to ensure licensing, registration, and protections are properly crafted to account for new technologies.

Over the past month, Ripple Labs has been active in three ways:

  1. Karen Gifford, Chief Compliance Officer, spoke on a Foreign Affairs’ panel with the U.S. Treasury. (VIDEO)
  2. Ripple Labs submitted a letter to the Conference of State Bank Supervisors regarding the licensing of virtual currency companies. (PDF)
  3. Greg Kidd, Chief Risk Officer, testified before the Canadian Senate’s Committee on Banking, Trade and Commerce on how Ripple can improve payment infrastructure. (VIDEO, PDF)

In these engagements, we’ve focused on three crucial points. We urge regulators to:

  • Account for the varying use cases of virtual currencies. It is necessary that regulators consider the different functions of virtual currencies when developing an effective and inclusive licensing process. Bitcoin (BTC), for example, acts as a replacement for fiat currency, while XRP, the currency deployed within the Ripple protocol, acts as an optional bridge between fiat currencies and as a security mechanism. Applying general and rigid regulations, consumer protections, and licensing requirements without considering the unique functions of each virtual currency will result in a system that inadequately accounts for and reduces risk.
  • Develop coordinated, national standards for registration and licensing of virtual-currency related businesses. The current regulatory regime, especially in the United States, is highly fragmented, making registration and licensing very cumbersome for startups, small companies, and businesses with broad reach. We believe that this fragmentation poses a competitive disadvantage for the United States, undermining our position as a leader in global payment innovation. As virtual currencies are national and global in scope, regulators should develop a national standard for registration and licensing.
  • Build upon existing rules for banks and money transmitters where appropriate. As payments become increasingly digital, virtual currencies are likely to play a greater role in our economy, even within traditional payment systems. Consequently, state regulators should seek to develop a modular licensing process, looking to existing rules for banks and money transmitters that may apply to virtual currency companies. If a business is already a money transmitter, but seeks to apply for a virtual currency license, or vice versa, the process could be streamlined in such a way that the company would only have to apply once, ultimately allowing them to avoid extra effort and high costs.

These points build upon our existing regulatory priorities from our previous post:

  • Ensure regulations account for the new technologies and governance models that will be necessary for creating a more competitive, innovative, and inclusive payment system.
  • Enable startups and smaller companies to contribute to the payment system.
  • Take a holistic view of risk and consider the cumulative impact of regulations.
  • Consider how new infrastructure technology can minimize payment, operational, and systemic risks while improving anti-money laundering (AML) efforts.


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