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U.S. SEC chairman Gary Gensler, notorious for his hurtful actions against blockchain firms, had recognized XRP’s and Ripple’s contributions to facilitating cross-border payments.
Gensler endorsed the usefulness of Ripple’s solution in moving payment between two countries during an economic forum on the impact of blockchain technology on finance in 2018.
During the interactive session, Jo Marie Griesgraber of the nonprofit “New Rules for Global Finance” posed a crucial question to the SEC chairman. Separating Bitcoin from blockchain technology, Griesgraber sought clarity on the feasibility of leveraging blockchain for instantaneous, low-cost international remittances through central banks.
She highlighted the exorbitant cross-border transmission costs from countries like Tanzania to Nigeria alongside the inefficiencies in the existing system.
In response, SEC chairman Gensler affirmed that blockchain technology is usable for cost-effective cross-border transactions without Bitcoin. He consented to the significant remittance costs from the movement between different fiat currencies.
Furthermore, Gensler outlined the historical challenges associated with nostro accounts and the intricate account base setup for international transactions. However, he expressed optimism about the potential of blockchain technology to streamline these processes.
He stated blockchain technologies are alternatives to traditional systems like SWIFT as they can function efficiently without needing a mechanism to bear counterparty risk during cross-border transactions.
Gensler Acknowledging XRP and Ripple
In this context, Gensler noted that a “bridge currency” [such as XRP] is necessary to facilitate seamless transactions between different fiat currencies. Gensler mentioned utilizing stablecoins backed by major fiat currencies or innovative currencies like XRP.
In his words:
“You could use blockchain, but the current thinking is you need a bridge currency in between, and that bridge could be a stable value that’s backed by the US dollar or the EUR, and it could be a currency like … Ripple has an alternative it’s just piloted in May [2018].”
While acknowledging the experimental stage of Ripple’s pilot in May, he underscored the transformative role a “bridge currency” on the blockchain could play in overcoming the hurdles of international remittances.
It is worth mentioning that the product Gensler referred to that got piloted in May 2018 was xRapid. xRapid used XRP for cross-border liquidity. Notably, xRapid has since been rebranded into Ripple On-Demand Liquidity (ODL), which has also been recently adapted into “Ripple Payments.”
Gensler Admired XRP and ALGO But Now Calls them Security
While the SEC chairman admitted to XRP’s role as a bridge asset in 2018, he tagged XRP as a security in a 2020 lawsuit, which has not ended nearly three years later.
Similarly, in a 2019 presentation, Gensler recognized Algorand (ALGO) as “a great technology that has a performance with which you could create Uber on top of it.”
However, in a lawsuit in April 2023, the SEC chairman categorized ALGO as a security.