Citibank Ends 25-Year Relationship with Ripple CEO Brad Garlinghouse Over Crypto Involvement

Ripple’s CEO Faces Banking Struggles Amid Industry Scrutiny

At the recent DC Fintech Week, Ripple CEO Brad Garlinghouse shared a troubling personal experience that mirrors a growing issue within the cryptocurrency industry: de-banking.

He revealed that Citigroup, where he had maintained a banking relationship for over 25 years, had cut ties with him due to his prominent position in the crypto space.

“They said, 'You have five days to move your money,’” Garlinghouse recounted.

He added that Citigroup was upfront about their decision, stating,

“You are a notable person in crypto, and having notable people in crypto, and banking the crypto industry means more scrutiny from federal regulators.”

This narrative highlights a wider trend in which individuals in the cryptocurrency sector are increasingly finding themselves unable to secure or maintain banking relationships.

What Does the Future Hold for Crypto Regulation?

Garlinghouse expressed a critical view of the current U.S. administration's stance towards cryptocurrency.

He accused the Biden administration, particularly SEC Chair Gary Gensler, of fostering a “reign of terror” against the industry.

“The U.S. Treasury Department and the Office of the Comptroller of the Currency have been hostile to the industry,” he asserted.

Despite this bleak outlook, he maintained a sense of optimism regarding the future.

“No matter what happens, we’re going to see a reset,” he stated, anticipating a shift in crypto policy following the upcoming presidential elections.

This sentiment reflects a belief that a change in leadership could lead to a more favourable regulatory environment for cryptocurrency.

Will XRP ETFs Become a Reality?

During his address, Garlinghouse was adamant that the approval of an exchange-traded fund (ETF) linked to the price of XRP is on the horizon.

He argued that the recent success of Bitcoin ETFs, which attracted $17 billion in investment, sets a precedent for similar financial instruments.

“I think it’s inevitable,” he stated about the XRP ETF, pointing to the growing interest in cryptocurrencies among institutional investors.

Companies like Bitwise Asset Management are already making strides towards filing for an XRP ETF, indicating a shift in market dynamics that could benefit the crypto sector.

Is the Current Regulatory Landscape Deteriorating?

Garlinghouse's experience is not isolated; many others in the cryptocurrency industry are encountering similar hurdles.

The increasing pressure from regulators is making it increasingly challenging for crypto-related businesses to establish and maintain banking relationships.

“Individuals within the crypto industry are being de-banked; I personally have been de-banked,” he lamented, highlighting the adverse effects of the regulatory climate on the industry’s key players.

The implications of this trend extend beyond individual experiences, suggesting a potential stifling of innovation and growth within the sector.

What Does Garlinghouse Recommend for Startups?

Amid these regulatory challenges, Garlinghouse offered candid advice for emerging cryptocurrency startups: incorporate outside the U.S.

“I hate saying that,” he remarked, referencing his own pro-U.S. sentiments. “But there’s too much uncertainty about protecting a company from being sued by regulators in the U.S., as Ripple was by the SEC.”

This statement reflects the precarious position that many crypto startups find themselves in, grappling with an unpredictable regulatory landscape that could jeopardise their future.

Criticism of Ripple’s Legal Strategy

Despite Garlinghouse's optimism, the ongoing legal battle between Ripple and the SEC remains a point of contention.

Legal expert Fred Rispoli has voiced criticism of Ripple’s leadership, particularly regarding their decision to seek a partial settlement with the SEC.

He argued that Garlinghouse and Ripple Chairman Chris Larsen missed an opportunity to pursue a full dismissal of all charges, especially concerning the “aiding and abetting” claims.

Rispoli contended that the SEC lacks sufficient evidence to substantiate its allegations, which raises questions about the effectiveness of Ripple’s current legal strategy.

In the face of adversity, Garlinghouse's remarks encapsulate the challenges and opportunities ahead for the cryptocurrency industry.

As the regulatory landscape continues to evolve, the actions taken by key players will undoubtedly shape the future of digital assets in the United States.