Ripple Optimistic About XRP Adoption by U.S. Banks
Blockchain startup Ripple is confident that U.S. banks and other financial institutions will express interest in incorporating XRP cryptocurrency for cross-border payments. This follows a significant court ruling that established XRP as not necessarily a security, providing a partial victory for Ripple in its long-standing legal dispute with the U.S. Securities and Exchange Commission (SEC). Ripple plans to initiate discussions with American financial firms in the third quarter, exploring the potential use of its On-Demand Liquidity (ODL) product, which leverages XRP for efficient money transfers in U.S. banks .
Landmark Ruling Declares XRP Not Inherently a Security
In a groundbreaking ruling, a New York judge recently determined that XRP, the cryptocurrency closely associated with Ripple, does not inherently qualify as a security. This decision refutes certain claims made by the SEC against Ripple. The company has been engaged in a legal battle with the SEC for three years, disputing allegations that it conducted an illegal offering of $1.3 billion worth of XRP. Ripple maintains that XRP should be classified as a commodity rather than a security.
Ripple’s Business Challenges Amid SEC Lawsuit
Ripple has faced significant challenges to its business as a result of the SEC lawsuit. The company experienced the loss of a major customer and investor, with MoneyGram, a prominent U.S. money transfer giant, severing its partnership with Ripple in March 2021. Additionally, Tetragon, a UK-based investor that had previously supported Ripple, sold its stake back to the company after an unsuccessful attempt to sue for the redemption of its funds.
Ripple’s Expectation of Banks Utilizing ODL Product
When asked about the implications of the recent ruling on American banks’ potential return to utilizing Ripple’s ODL product, Ripple’s General Counsel, Stu Alderoty, expressed confidence in a positive outcome. He stated that Ripple hoped the decision would provide comfort to financial institution customers, encouraging them to engage in discussions about real-world challenges related to cross-border value transfers without incurring exorbitant fees. Alderoty expects the current quarter to generate numerous conversations with customers in the United States, with the hope that some will translate into concrete business opportunities.
Ripple’s Business Focus Shifted Outside the U.S.
While Ripple’s global employee base of over 900 is evenly distributed, the majority of its business currently originates from outside the United States. Alderoty clarified that Ripple, along with its customers and revenue, primarily operates outside the U.S. Nevertheless, Ripple’s strong presence in the country positions it favorably to engage with American financial institutions and explore potential collaborations.
Ripple’s ODL and XRP’s Role in Cross-Border Payments
XRP, the fifth-largest cryptocurrency by market capitalization of $37.8 billion, serves as Ripple’s digital asset for facilitating efficient cross-border money transfers. By acting as a “bridge” currency between different fiat currencies, such as U.S. dollars and Mexican pesos, XRP addresses the challenge of pre-funding accounts on the receiving end. Ripple asserts that XRP enables near-instantaneous money movements, significantly enhancing transaction speed.