What is the currency of the future? Is it a world where transactions are quick, borderless, and secure, largely enabled by digital or cryptocurrencies? This new form of currency could be built on decentralized blockchain technology. It would make it resilient to single points of failure and resistant to traditional forms of financial fraud. It’s increasingly likely that the future dominant currency will be one that offers the greatest utility. What will be the currency of the future? Fintech Review asked a few questions to Kirit Bhatia from Ripple.
Tell us more about Ripple. What is your elevator pitch?
Ripple is the leading provider of crypto solutions for businesses. We are helping organisations of all sizes to drive bigger and better impact with the power of crypto. We’re continuing to find new opportunities, moving beyond payments, to serve our customers. Ripple is becoming the trusted resource for enterprises navigating a crypto-enabled world.
Through blockchain technology, we’re enabling global financial institutions, businesses, governments and developers to move, manage and tokenise value, helping to unlock greater economic opportunity for everyone, everywhere. We recognised the value of crypto technology back in 2012 and have seen its dominance grow over the last decade.
What is your background and what is the story behind the company?
Personally, I was attracted to the fintech industry by the opportunities the technology can enable outside of the traditional finance system. I have spent 11 years in Asia with a number of traditional financial services companies. I witnessed the struggles of people there in sending money to their relatives in different countries. As well as the degree to which transaction fees can eat into their hard earned money. The benefits of using blockchain and crypto technology to build solutions to solve these problems were clear.
Ripple’s goal is to develop solutions that create a more equitable, sustainable and inclusive global economy. More companies are beginning to realise the real world benefits of integrating crypto into their operations. We’ve built a network of organisations that share our vision of enabling value to move seamlessly around the world.
In short, what are CBDCs?
A CBDC or Central Bank Digital Currency is the sovereign equivalent of private cryptocurrencies and digital assets like Bitcoin, Ethereum and XRP. CBDCs are typically a digital representation of a country’s official fiat currency, backed by the central bank’s authority. It is a digital token represented on the blockchain. They are issued and controlled by central banks but used by people and businesses for retail payments, much like cash but in digital form. Wholesale settlements in the interbank market could also use CBDCs.
Each Central Bank will have its own motivations for pursuing a digital currency that will be driven by specific market challenges and opportunities. The nature of that primary goal – whether it’s overcoming limitations of existing payments infrastructure, promoting financial inclusion, boosting competition or fostering innovation – will determine the approach and technology of each CBDC.
How are CBDCs going to change financial services?
The potential of CBDCs to change financial services is significant. Not only do they have the ability to enhance the existing payments infrastructure, they should promote financial inclusion, opening up access to financial services for unbanked populations. What’s more, they can serve to foster a mindset of innovation in the financial world, enabling new digital features, such as smart contracts and programmable money.
It is therefore no surprise that many countries are exploring CBDCs that solve specific domestic challenges. Each central bank will need to implement a holistic strategy that enables their CBDC to interact efficiently with other markets, as well as ensuring it can scale and evolve to meet future requirements. Several G20 countries are looking at the technology, while some smaller countries are already piloting programmes. At Ripple, we’re working with the likes of Montenegro, the Republic of Palau and Bhutan which are looking to drive innovation and digitalisation across their nations with CBDCs and government-issued stablecoins.
Any innovation in fintech more broadly that you are really excited about?
Innovation in the sector will largely centre around how successful jurisdictions are in developing clear, simple and cohesive regulatory guidelines for fintechs working in their regions. How these work together globally will be equally critical.
We’re already seeing regulators making great strides across the globe in providing clear frameworks for the crypto industry. In particular, with the passing of the Europe’s Markets in Crypto Assets (MiCA) regulation marking a huge moment for the industry. Likewise other regions including the UK, Dubai and Singapore are all working on building their own regulatory clarity.
Such regulatory frameworks will give crypto businesses and entrepreneurs the confidence and structures they need to build innovative companies. With continued regulatory coordination, sustained investment and political vision, we foresee an exciting opportunity to build on the foundations already created and to make the most of the next wave of global financial innovation by developing trust, transparency and alignment amongst all involved.
Any plans for the future or product roadmap you want people to know about?
We’re continuing to focus on crypto utility, growing sustainably and building trust with customers and partners. 2022 was a strong year for Ripple, but we’re expecting the next 12 months to be our strongest yet. Over the course of 2023 we’ll be entering into new markets, with new customers and aiming to increase our global footprint.
Recently we announced the launch of our Liquidity Hub product, which provides businesses with a simple and seamless way to manage their crypto liquidity needs. We envisage a multi-asset future in which consumers and businesses will have to manage a broad portfolio of assets across fiat currencies, cryptocurrencies, Central Bank Digital Currencies (CBDCs), Non-Fungible Tokens (NFTs) and more. Businesses will need to be able to move in and out of these assets easily, and having liquidity to be able to do so will be essential for future operations. We’re already seeing the tokenisation of a vast array of real-world financial assets, all promising exciting developments in the space.
2022 was a turbulent year for the crypto industry as a whole and building trust and transparency will continue to be essential alongside working closely with jurisdictions globally to get regulatory clarity. Ripple will continue to advocate for clear, universal and appropriate regulatory frameworks to unlock global crypto utility.