During a recent interview with Brooks Entwistle, senior vice president of customer success and managing director of APAC and MENA at Ripple, the executive revealed that Ripple is currently in talks with more than 20 central banks regarding the development of a central bank digital currency (CBDC).
While large countries like China and the U.S. have focused on developing a CBDC via the public sector, smaller countries with fewer resources are opting to utilize the services of companies like Ripple to design a CBDC that aligns with their needs.
“No two situations, no two central banks, no two countries are the same. There are 200-plus countries out there. There are a lot of central banks and they have different needs and there are different parts of this journey,” Entwistle said. “So, we are in dialogue with not ten, not twenty, but a bunch more central banks around the world on these discussions. We’ve announced projects with Bhutan, with Palau, and others to come, and I think that just shows you that this really resonates now.”
Entwistle went on to note that being able to collaborate directly with governments and regulators is “invaluable,” saying that in most parts of the world discussions about crypto and blockchain have been welcomed, as opposed to the U.S., where Ripple is being sued by the Securities and Exchange Commission (SEC) for the sale of unregistered securities.
“Regulators welcome that interaction here in Singapore, up in Tokyo, in Switzerland, in the U.K. – we’re part of that dialog. You are on panels, you’re in rooms with the regulators talking about what we’re seeing, what we’re learning, and it’s a two-way process,” Entwistle said. “It’s really on us, as an industry, to prove utility and why crypto matters, why blockchain matters, and what it can do for countries, for citizens, for businesses, for big world problems. If we can prove that case and make that case in a strong way, then regulators will follow and come along.”
The U.S. risks falling further behind in the CBDC race due to its oppositional stance to the crypto industry, he warned, which will only serve to push projects and companies to more welcoming jurisdictions.
The decision in the Ripple vs. SEC case is likely to become a landmark ruling that will not only have an impact on Ripple and XRP users, but on the crypto industry as a whole.
“It’s about the entire industry and it’s about innovation in the United States,” Entwistle said. “We have done all we can on our side. We’ve made our best case. It is now with the judge, and we would hope and expect that in the first half of 2023 there would be some resolution.”
For now, the company is focused on building and innovating, and they will deal with the outcome of the SEC case when it is known. Entwistle suggested that this was the best path forward, especially in an environment where capital is drying up and companies are struggling to stay afloat.
“You’ve only got the ability to go after a couple of things that really matter. This is not a time to chase bright, shiny things all over the world in the hope that some of them play out.” He said what firms need to be asking themselves at this time is, “Where can you add value and make a difference?”
Ripple is focused on assisting emerging countries with their CBDC development in an effort to help reduce the number of unbanked people in the world, Entwistle said. In Southeast Asia alone, there are 290 million people without banking services, a figure that is larger than the population of Indonesia. “We think about the opportunity for us not in small subregions, but as a global opportunity.”
And it’s not just individuals that stand to benefit, he added, as small businesses in underbanked regions will also reap the rewards of being able to easily move capital between offices or across borders and having a clientele that can pay via official channels. “So there’s a lot of room to run, but we have to continue to be mission-driven on that front, because when you are, it keeps you honest with policymakers.”
When asked about competition in the cross-border payments space, Entwistle explained that the cross-border flow of value is one of “the last great unsolved financial problems or puzzles in the world,” and solving it requires a global network.
The Ripple executive stressed above all that crypto is not going away, so it makes sense for governments around the world to work with the industry to develop clear regulations and determine the best way to integrate CBDCs into the global economy.
“There is no question that digital currencies are going to be a part of the landscape going forward,” Entwistle said, “and every country has to have an answer for their own constituents as to what it will do and how it will impact and most importantly, we think, in the positive case, how it can really drive economic growth and financial inclusion.”