News surfaced yesterday in regards to the banking giant, JP Morgan Chase who announced that it will issue its own cryptocurrency, although they aren’t the first.

Three years ago, four of the biggest banks around the globe revealed their plans to launch a digital asset designed to streamline cross-border transactions and boost speed which was called Utility Settlement Coin. The settlement coin brought in the idea alongside Deutsche Bank, BNY Mellon and Santander. On top of this, Barclays, CIBC, NEX, HSBC, MUFG, Credit Suisse and State Street are now all on board for the idea.

The pilot phase for UBS was set to launch last year but not many details were revealed on the coin’s development since the middle of 2018.

According to Brad Garlinghouse (CEO of Ripple), bank backed digital assets are an unrealistic and “deeply misguided” solution for the crypto space. When news about the Utility Settlement Coin was announced, Garlinghouse penned an op-ed called “The Case Against BankCoin” and outlined why he thinks that bank-backed cryptocurrencies are on the path to failure.

“A bank-issued digital asset can only really efficiently settle between the banks who issued it. Then, two scenarios can play out. Scenario one: all banks around the world put aside competitive and geopolitical differences, adopt the same digital asset, agree on its rules, and harmoniously govern its usage. Fat chance. Scenario two (the more likely scenario): banks not in the issuing group issue their own digital assets with their own sets of rules and governance. We’re kinda seeing this already, as the FT points out, with Citi’s Citicoin and Goldman Sachs’ SETLcoin. 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 second big problem with the ‘utility settlement coin’ is it seems it’ll be backed by a basket of currencies. Once backed by cash, it’s no longer an asset; it’s a liability. Trading liabilities then ultimately requires moving cash across borders, re-creating today’s system but adding more friction!”

According to the CEO, independent digital assets give bank the best shot at truly bringing payment system into the modern era and thinks that XRP is the cryptocurrency that will make it happen.