Growth of Ripple, XRP and Virtual Currencies Cited in Proposed Rule on US Remittances

The US Consumer Financial Protection Bureau cites Ripple, XRP and the growth of virtual currencies at large in a new proposal on remittances.

The agency is considering several changes to the Electronic Fund Transfer Act (EFTA) in response to the evolving state of cross-border payments technology.

The modifications would adjust the number of remittances, from 100 to 500, that businesses can send without having to define themselves as a remittance transfer provider.

The Burearu is also looking to allow insured institutions to estimate the exchange rates on remittance transfers to a particular country, as long as they made fewer than 1,000 transfers to that country the previous year.

Companies could also estimate third-party fees if they made fewer than 500 transfers to the country in question the prior calendar year.

The agency highlights the evolution of cross-border payments as a primary reason for the proposed changes, pointing out that “substantial changes” to the industry are underway as fintech companies create new, faster and more efficient ways to move money.

The report lists technology from the leading financial messaging network SWIFT, San Francisco startup Ripple, virtual currencies and the digital asset XRP as examples of evolution in the industry.

“The Bureau has continued to monitor the remittance transfer market since the publication of the Assessment Report and observes that most of these developments continue to progress. Examples include:

(1) The continued growth and expanding functionality of the Society for Worldwide Interbank Financial Telecommunication (SWIFT)’s ‘global payment innovation’ (gpi) tracking product, which can increase the amount of up-front information available to sending institutions, and the expansion of the major payment card networks’ capacity to support cross-border payments;

(2) the continued growth of “fintech” nonbank remittance transfer providers and their further expansion into partnerships and other relationships with banks and credit unions, which allow such entities to tap into the closed network payment systems that nonbank remittance transfer providers have developed; and

(3) 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 proprietary virtual currency, XRP, which can be used to effect settlement of those transfers.”

The proposed changes have been submitted for public comment before final regulations are issued.

Comments must be submitted by January 21st, 2020.

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