Ripple has made it a point to create blockchain and cryptocurrency products that are designed to work seamlessly with institutional companies. This has also been reflected in Ripple’s collaborations as well as its roadmap.
During the recently concluded Swell conference, former New York State Superintendent of Financial Services, Benjamin Lawsky discussed the origins and design of New York’s popular BitLicense
Lawsky sat down with Stuart Alderoty, Ripple’s General Counsel to discuss the origins and design of BitLicense and how it laid the foundation for a plethora of crypto companies. Lawsky claimed that BitLicense was first envisioned because of the sheer lack of regulatory clarity in the fintech space. In his words, cryptocurrency companies were being subject to Civil War-era regulations in the middle of 2014.
“FinTech was a world of innovation, which has led a thousand flowers to bloom and basically has no regulation, colliding with the world of financial services, which is the most conservatively, fully-regulated area we have.”
The creation of the BitLicense was first met with trepidation by the cryptocurrency community. Once they realized that the license actually gives them credibility, several companies applied for it. Lawsky and his team crafted a framework that could provide the confidence that licensed companies have sufficient capital, consumer protection, and cybersecurity controls.
Since its launch, 22 companies have obtained a BitLicense allowing them to run smoothly within the vicinity of New York and other affiliated areas. At the same time, 15 companies had declined to obtain the license. Out of those, seven have either suffered a hack or have gone through money laundering issues.
The BitLicense founder then spoke to Ripple about how the US was falling behind countries such as Singapore when it comes to innovation in the fintech space. Lawsky pointed out that the US was very slow in 2019 and that has allowed South Asian countries to leapfrog them.
Lawsky candidly mentioned that the laws put forth by Singapore had taken the extra steps to ensure cryptocurrency inclusivity. According to him, cryptocurrency regulations should find ways to ensure that both the big companies as well as startups have a level playing field. He urged new framework creators that characteristics such as multi-sig and tokenziation should be added into their fold.
Benjamin Lawsky was confident that progressive states like California would make the right decision to propagate the cryptocurrency industry. This included institutions working hand in hand with fintech companies to create a safer environment for users. He picked out Ripple’s On-Demand Liquidity [ODL] feature as one of the disruptors within the mainstream financial market.