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At the start of today, a tweet from @DiepSanh raised a conversation about why banking institutions do not use xRapid. The tweet explained that banks did not use xRapid because of regulatory uncertainty regarding digital resources and that only payment service providers used the blockchain-based solution for cross-border payments. The tweet also included an undated video clip of 1.38 minutes of Ripple's Global Head of Banking, Marjan Delatinne, stating the same.
Following is the @DiepSanh tweet (Stephen Diep).
Because of regulatory uncertainty, NO banks are using xRapid now, ONLY payment service providers.
Marjan Delatinne, Ripple
NOV18#XRP #xrapid #ripple #iov pic.twitter.com/QeLxLQQaKJ– Steven Diep (@DiepSanh) December 18, 2018
In the video, Ms. Delatinne states the following:
This product [xRapid] it's now live … just to clarify … no bank is using it because, as you've probably heard, the regulatory framework on the use of digital assets is not very clear for banks.
But payment service providers and some other financial institutions are less governed by these obligations …
Because banks would be hesitant to use xRapid
As stated in Ripple's Global Head of Banking video, all banks around the world must adhere to certain regulations and laws established by the jurisdictions in which they operate. Banks also comply with the direction provided also by the central banks of the same jurisdictions.
As long as global central banks – and their corresponding governments – will not issue adequate regulatory direction regarding digital assets, xRapid will probably only be used by payment service providers. These types of companies are private entities that offer only remittance services.
Digital currencies of the Central Bank (CBDC)
However, there is also a slight chance that global central banks will create their own digital currencies with internal legal support to facilitate cross-border transactions.
About xRapid
xRapid uses XRP to find instant liquidity for cross-border payments. The use of the digital asset minimizes the costs incurred during normal foreign exchange conversions that are found in traditional cross-border payments.
This is also the aspect of speed since xRapid transactions were shown in 2 – 3 minutes. Similar transactions with SWIFT take 2 to 3 days.
To date, only 3 financial institutions have confirmed the use of xRapid: Mercury FX, Cuallix and Catalyst Corporate Credit Union.
What are your thoughts on the idea that banking institutions are not using xRapid because of regulatory uncertainty regarding digital resources? Let us know in the comments section below.
Disclaimer: This article is not intended to give financial advice. Any other opinion present here is purely that of the author and does not represent the opinion of Ethereum World News or one of its other writers. Perform your research before investing in one of the many cryptocurrencies available. Thank you.
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