Ripple applies for a banking license and Fed master account to bring RLUSD under dual supervision

Since the U.S. stablecoin bill "GENIUS Act" was promoted, the crypto industry has sparked a "banking" trend. Previously, after Circle announced its application for a bank license, Ripple's CEO Brad Garlinghouse also publicly stated on 7/3 that he has applied to the Office of the Comptroller of the Currency (OCC), seeking to become a "national bank" regulated by both federal and state governments. Circle Applies for Bank License First Stablecoin USDC issuer Circle officially applied to the OCC on 7/1 to establish the First National Digital Currency Bank, offering digital asset custody services to institutional clients while being supervised by the federal government. Circle's CEO Jeremy Allaire stated that this application is to proactively comply with the upcoming U.S. stablecoin legislation. Ripple Announces Follow-up, RLUSD Becomes "Dual-Regulated" Stablecoin On 7/2, Ripple's CEO Garlinghouse announced on Twitter (X) that they have also submitted an application for a National Trust Bank Charter to the OCC. Garlinghouse emphasized that Ripple has always valued compliance, and this application aims to make their stablecoin RLUSD one of the few stablecoins regulated by both federal and state governments. RLUSD is already within the regulatory framework of the New York State Department of Financial Services (NYDFS). Ripple Also Applies to Fed for Master Account, XRP Rises In addition to applying for a bank license, Ripple has simultaneously applied to the Federal Reserve (Fed) for a Master Account. Garlinghouse stated that if approved, Ripple can directly deposit RLUSD reserves with the Fed, further enhancing fund safety and RLUSD credibility. This application was submitted through Standard Custody, a crypto custody institution acquired by Ripple in February 2024. Garlinghouse added that while the crypto industry has suffered from the Biden administration's de-banking (Chokepoint 2.0) actions in recent years, the situation has now reversed. Congress is beginning to legislate, and banks are willing to participate, which led Ripple to take the initiative. After the news broke, XRP rose to $2.29 and ultimately closed at $2.24, with a daily increase of 3.73%. (Note: A Master Account allows the holder to trade directly with the Fed without intermediary banks, enabling banks to deposit funds and earn Fed interest.) Deutsche Bank strategists recently noted that the U.S. government seems to be adopting a new financial strategy, the "Pennsylvania Plan," attempting to break free from foreign debt dependence and consolidate the dollar's strong position through U.S. dollar stablecoins and domestic incentive policies, potentially becoming a core economic weapon to save U.S. debt.

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Pennsylvania Plan: The Starting Point of a Major Shift in US Debt Strategy

A few days ago, George Saravelos, Head of Foreign Exchange Research at Deutsche Bank AG, proposed the "Pennsylvania Plan", aimed at addressing the dual pressures of long-term fiscal deficits and current account deficits in the United States. Its name is derived from the location of the US Treasury, Pennsylvania Avenue in Washington, DC.

As of July 2, 2025, the US federal government debt scale has reached approximately 36.2 trillion dollars. The Pennsylvania Plan has therefore been widely discussed in international financial and media circles recently, and is viewed as "one of the potential policy directions for Trump's second term".

Compared to the previously controversial "Mar-a-Lago Accord", this plan focuses on moderate and feasible market-based methods, attempting to achieve "de-foreignization" of US debt through financial products or incentives such as USDC, regulatory relaxation, and tax incentives, bringing debt back to domestic absorption.

(US Debt Ceiling Approaching Again? JPMorgan Warns of Potential Debt Collapse, Bessent: The US Will Never Default)

Deutsche Bank's analysis points out that the US economy is facing macro constraints: "External deficits, negative Net International Investment Position (NIIP), and government inability to compress expenditures". In situations where traditional methods are ineffective, only financial techniques and policy combinations can be used to find sustainable new financing routes.

USDC Becomes US "Digital Chip": Consolidating US Debt Demand

The most notable part of this plan is to use USDC as a starting point, allowing the US government to indirectly retain overseas funds that are currently lacking enthusiasm or likely to escape during debt market fluctuations.

Saravelos points out that the US government can encourage or support stablecoin issuers who expand their scale with Treasury bills as reserve assets, issuing digital dollars that can circulate in the global market through holding short-term US Treasury bonds. This allows foreign investors to continue supporting US debt while investing or conducting financial operations through USDC, creating an entirely new debt acquisition channel for the United States.

In other words, the success of stablecoins will form a new global demand for the US dollar, transforming foreign investors from directly holding US debt to indirectly holding it through stablecoins. On one hand, this consolidates the sales of US short-term debt, and on the other hand, it keeps the global monetary market immersed in the "digital dollar" flood, bringing US dollar hegemony back to glory.

(One Dollar Becomes Two? How Stablecoins Quietly Replicate the US Monetary System, Alleviating Debt Pressure and Printing Money?)

Trump's Economic Route Takes Shape: Internal Debt Digestion and Synchronized Policy

Many specific policies preset by the Pennsylvania Plan have gradually surfaced recently, including discussions between the US Treasury and the Federal Reserve about relaxing Supplementary Leverage Ratio (SLR) regulatory restrictions, and potential signals of third-quarter interest rate cuts from Federal Reserve board members. These actions' consistency with the plan's strategy also suggests that the Trump administration is indeed playing this game.

Saravelos mentioned the following supporting measures in the plan:

• Tax incentive benefits: Providing tax exemptions or deductions for long-term debt-holding institutions (such as insurance companies and retirement funds)

• Issuing special government bonds: Such as ultra-long-term bonds of 50 to 100 years for pension funds, floating-rate bonds for banks and funds, etc., to meet specific asset allocation needs

• Financial repression measures: When necessary, the government can legislate to force specific institutions like insurance companies or retirement funds to increase their U.S. debt allocation

When the United States is unwilling to improve its fiscal situation, the path with the least political and economic resistance is for the U.S. government to seek more fiscal funds through domestic investors, replacing foreign capital with domestic funds to build a more stable bond market structure.

Global Effect: Stablecoins Compress Non-USD Currency Survival Space

Crypto KOL Vito pointed out that if the Pennsylvania plan is successful, it will not only affect the internal U.S. market but also impact the global financial order:

USD stablecoins will erode other countries' efforts to promote local legal currency internationalization, while the U.S. can obtain global "seigniorage" dividends. With stablecoins as a new carrier, Americans can continue to buy globally and absorb global value assets.

In this way, the United States successfully achieves more efficient global economic control, while non-U.S. countries face a more challenging financial sovereignty defense battle.

(USD Depreciation Raises Concerns! Crypto Market Calls for Stablecoin Diversification: Non-USD Options Become DeFi's New Trend)

Pennsylvania Plan as USD Lifeline

This new financial strategy related to stablecoins, firstly, provides an export for U.S. debt, and secondly, uses its high liquidity to stimulate and consolidate USD demand. The Pennsylvania plan does not change the imbalance of the U.S. fiscal structure but buys more time and leverage through blockchain technology and policy design.