SWIFT vs. Ripple: The Ongoing Battle for Payment System Supremacy
In the rapidly evolving landscape of financial technology, the rivalry between Ripple and SWIFT is intensifying. A prominent SWIFT executive recently criticized Ripple and its digital currency, XRP, questioning its trustworthiness despite the resolution of a high-profile SEC lawsuit.
SWIFT’s Executive Critiques Ripple and XRP
Tom Zschach, Chief Innovation Officer at SWIFT, expressed skepticism about Ripple’s resilience on LinkedIn. Responding to a post commending Ripple and XRP for weathering the SEC lawsuit, Zschach suggested that true resilience lies in neutral and shared governance rather than merely surviving legal challenges. He argued that financial institutions would likely avoid relying on a competitor’s platform.
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Zschach’s remarks reignited the debate over centralization within the XRP ecosystem. Critics have long contended that Ripple wields significant control over the XRP Ledger and its native token, a claim Ripple refutes. Zschach implied that many institutions would shy away from adopting the XRP Ledger or XRP, given Ripple’s position as a direct competitor.
Ripple’s quest for a national banking license, if successful, would place it alongside the very banks it seeks to integrate into its payment network. This contrasts with SWIFT’s role, which serves banks without directly competing with them. Ripple’s blockchain-based payment solutions offer speed advantages, potentially giving it an edge over traditional systems like SWIFT.
The timing of Zschach’s critique coincides with mounting criticism of Ripple executives for selling off XRP holdings. Crypto influencer Bitlord has threatened action against Ripple if the selling persists, arguing that the sales may indicate financial struggles and intense competition. Bitlord also speculated that governments might resist adopting Ripple’s technology, and banks may prefer to develop their payment rails independently.
Ripple’s Approach to Compliance: A Misstep?
The SWIFT CIO also responded to accolades regarding Ripple’s commitment to compliance, which involves collaborating with regulators. Zschach contended that compliance should not hinge on one company persuading regulators of its legitimacy. Instead, it should involve a collective industry consensus on shared standards, free from the control of any single entity’s balance sheet.
Data from XRP Scan reveals that Ripple escrow accounts hold approximately 32% of XRP’s total supply, fueling criticism of the XRP Ledger’s centralization compared to other blockchain networks. On-chain analyst ZachXBT recently described XRP holders as merely serving as “exit liquidity” for insiders.
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