Ripple's Open Letter to Congress Highlights its Non-Crypto Nature
Last week, Ripple executives penned an open letter to U.S. Congress with the intention of distancing the company from the controversy surrounding Facebook's cryptocurrency plans.
For the past few weeks, Facebook has been the focal point of discussions regarding cryptocurrency regulation around the world. After the social media network announced last month that it was planning a blockchain-based payment platform named Libra, U.S. regulators reacted rather overzealously. Project head David Marcus has been called before several regulatory bodies including the Senate Banking Committee and the House Financial Services Committee. Amongst a slew of difficult questions and damning indictments, Marcus has been asked repeatedly to halt development of the Libra project. Lawmakers reportedly fear that the network could be used to facilitate fraudulent activities like money laundering and some claim it could even destabilize the global economy.
Pre-empting the possibility that other blockchain projects could now become embroiled in the controversy, Ripple has decided to address the situation proactively. In its open letter, Ripple executive chairman Chris Larsen and CEO Brad Garlinghouse appeal to Congress to not "paint us with a broad brush."
The letters go on to reassure lawmakers that many in the digital currency industry are responsible actors. "We are responsible to U.S. and international law. We are responsible to serving the greater good," the letter assures.
Is cryptocurrency really that big a threat?
While there is no question that cryptocurrencies have been (and probably still are) used for illegal activities, statistics show that traditional currencies like the U.S. dollar are used far more often to facilitate crime. There is little-to-no evidence to suggest that the widescale adoption of cryptocurrencies would significantly increase financial fraud or illegal activities. It seems far more likely that this fresh wave of overbearing legal scrutiny is the result of pressure from the banking elite who fear their future profits may be at risk.
The rather intense, pleading nature of the open letter from Ripple highlights the differences between the company and other blockchain projects. One might surmise that the desperate need for approval reveals just how far removed Ripple is from the original tenets of cryptocurrency.
Bitcoin, in particular, was specifically designed to operate entirely outside of government or regulatory policies. In fact, its very nature relies upon the fact that it has no oversight or central point of control. Ripple, on the other hand, more closely resembles an online banking service like Paypal or Venmo, which require licensing and approval in order to operate. In contrast to the original intentions of Bitcoin, Ripple attempts to assure regulators that digital currencies are not meant to replace fiat money: "In our view, digital currencies have the opportunity to complement existing currencies like the U.S. dollar—not replace them."
However, by embedding an article referring to a 2008 bank bail-out in the Bitcoin genesis block, inventor(s) Satoshi Nakamoto made it abundantly clear that it's intention is to replace fiat. The message was clear: citizens the world over are tired of governments that continue to support irresponsible banking activities that serve only to make the rich richer and the poor, poorer.
While Facebook has agreed to comply with regulatory procedures, it has fallen short of agreeing to cease development of Libra altogether. Considering its overly-compliant nature, one questions what Ripple's response would be if asked by Congress to cease all operations?