The head of fintech company Ripple Labs Brad Garlinghouse has criticised the recent initiative of four major banks to create the blockchain-based Utility Settlement Coin for interbank settlements.

Mr Garlinghouse speculates on LinkedIn that the issuers’ group would hardly convince other banks to join the game. Rather, the banks will prefer to have their own digital currencies with their own governance. He cites Citicoin and SETLcoin currently developed by Citigroup and Goldman Sachs respectively.

“The result would be an even more fragmented currency landscape than what we have today. If banks of different digital asset groups want to settle trades with one another, they’ll have to make markets between their unique digital assets or trade between their digital assets and a common fiat currency. What a mess!”

The fact that the Utility Settlement Coin is backed by a basket of fiat cash turns it from an asset into a liability, and this will complicate cross-border transactions, he claims.

According to Brad Garglinghouse, Ripple network that provides instant mediator-free transactions between banks may offer them a single cryptocurrency XRP. He says that international transactions in XRP are much faster than in bitcoin and other independent cryptocurrencies.

Lyudmila Brus