- The Bureau of Consumer Financial Protection, US government-backed agency which protects consumers in the financial industry, released a dossier which touched upon the benefits of Ripple’s XRP.
- The document detailed the benefits of using the digital asset for cross-border payments and how It can help banks and credit unions.
- The report proposed that existing rules defining international money transfers must be altered so the payer discloses an exact amount to the recipient as opposed to just an estimate.
More central banks and government-backed bodies have begun to acknowledge the benefits of boosting the crypto sector for cross-border remittance.
The Agency responsible for consumer protection in the financial sector, The Bureau of Consumer Financial Protection (CFPB) released a document addressing remittance transfers under the Electronic Fund Transfer Act. The Bureau said that they have been analysing SWIFT’s gpi tracking product and the expansion of crypto-related companies such as Ripple and XRP since the publication of the Assessment Report.
The new proposed rule detailed some of the developments in the payment transfer sector which must continue to progress. For instance, the Society for Worldwide Interbank Financial Telecommunication (SWIFT)’s gpi tracking product, “which can increase the amount of upfront information available to sending institutions, and the expansion of the major payment card networks’ capacity” will increasingly support cross-border payments.
In addition, it said that the continued development of fintech nonbank remittance transfer providers which are entering into partnerships with banks and credit unions, allow such entities to tap into the closed network payment systems.
It added that “the continued growth and expanding partnerships of virtual currency companies, such as Ripple, which offer both a payments messaging platform to support cross-border money transfers as well as a virtual currency, XRP, which can be used to effect settlement of those transfers [is necessary],”
The report concluded that digital assets such as Ripple’s XRP could enable banks and credit unions to know the precise total amount that remittance transfers payees will receive before the money is sent.
Stressing on the need for increased transparency, it said:
“To the degree banks and credit unions increase their reliance on closed network payment systems for sending remittance transfers and other cross-border money transfers, the Bureau notes that this could result in greater standardization and ease by which sending institutions can know exact covered third-party fees and exchange rates.
“These developments suggest that in the future there may be means by which banks and credit unions could reduce their remaining reliance on estimates. These developments all share a fundamental similarity: They all apply elements of a closed network payments system to cross-border money transfers sent by banks and credit unions.”
Echoing the same sentiment, Stuart Alderoty, General Counsel at Ripple, said that Ripple’s products work with an open network that is becoming highly decentralized and therefore will facilitate uniformity of the terms and conditions for global money transfer processes.
The Consumer Financial Protection Bureau believes that Ripple’s products could allow banks and credit unions to know the exact final amount that recipients of remittances will receive before they are sent. So do we!https://t.co/GTVQYf3wAM
— Stuart Alderoty (@s_alderoty) May 16, 2020
Apart from knowing the exact amount that one would receive during a transaction is hardly the only benefit. Payments through RippleNet turn out cheaper, quicker and seamless.