While the cryptocurrency sector enters a phase of uncertainty with regard to regulation, plenty of bigger banks are just waiting for a chance to cash in. According to Tim Rice, the CEO of Coin Metrics, more and more risk-averse financial institutions are leaning towards digital assets and what they have to offer. In an interview with Decrypto at the Chainlink SmartCon event, he explained that their primary concern is to know how they can reduce the risk involved.
New Firms Prioritize Reputation Over Innovation
In an effort to convey his understanding of the situation, he elaborated that crypto firms that have been active in the space for a long time know how to manage risks, but this isn’t the case for newcomers. Not to mention, these new firms don’t have the same luxury to test the effects of taking risks on their reputation. As far as traditional financial institutions are concerned, they are full of professionals who want cryptocurrencies and digital assets to crash and burn, he says. As a result, even people looking to experiment with the risk tend to be extra cautious.
NY’s Large Banks Want ‘In’ But Awaiting Regulatory Clarity
In fact, he mentions how banks in New York want to enter the cryptocurrency market, but need some regulatory clarity first. And it’s not just a matter of banks looking to explore cryptocurrencies, he says, but their customers who already own crypto but need a convenient way to use it. So once they see that regulatory authorities have set some rules and guidelines in place, they’ll feel much more comfortable joining the crypto space.
Upcoming Verdict on SEC Versus Ripple Can Have Massive Effect
But regulatory authorities such as the Securities and Exchange Commission haven’t made things easy for the crypto space. Ever since it filed a lawsuit against Ripple, investors, holders, and crypto proponents are anticipating how the results could change the sector entirely. In December 2020, the SEC sued both the CEO and co-founder, alleging that the pair raised over a billion dollars through an unregistered security offering of the XRP token.
According to Brad Garlinghouse, CEO of Ripple, there could be a response within the first half of 2023. The lawsuit against Ripple states that the Ripple token, XRP, should be regulated as a security.
He also understands that as the biggest lawsuit in the crypto space, it can have implications on various aspects of the industry. It’s why he stated that the company would consider entering a settlement with the SEC if the agency states that the token isn’t a security.
Speaking at the DC Fintech Week, he acknowledged that Ripple has limited business in the US, but this isn’t the case for many other parts of the world, especially Latin America.