Last week, blockchain startup Ripple recorded a historic victory against the US Securities and Exchange Commission (SEC) in its longstanding battle against securities law violations.
Now that Ripple’s native cryptocurrency XRP doesn’t have the label of a “security,” the company is confident that U.S. banks and other financial institutions will show interest in adopting XRP for cross-border payments.
In an interview with CNBC last week, Ripple’s general counsel, Stu Alderoty, said Ripple plans to enter into discussions with U.S. financial firms in Q3 about using its On-Demand Liquidity (ODL) product. This product uses XRP for efficient money transfers.
When asked if the ruling would lead US banks to start using Ripple’s ODL product again, Alderoty answered in the affirmative, saying “I think the answer to that is yes”. He further added:
“I think we’re hopeful that this decision would provide some comfort to financial institution clients or potential clients to at least come in and start the conversation about the issues they’re experiencing in their business, real issues in terms of moving from value across borders. without incurring obscene costs. Hopefully this quarter in the United States will bring a lot of conversations with customers, and hopefully some of those conversations will actually lead to real business.”
Amid the legal battle with the SEC over the past two and a half years, Ripple had sourced most of its business from outside the US. Amid its legal battle with the US SEC, several of Ripple’s US partners had parted ways with the company. For example, in March 2021, US money transfer giant MoneyGram ended its partnership with Ripple in March 2021.
Similarly, Tetragon, a UK-based investor who had previously backed Ripple, sold its stake back to the company. This decision came after Tetragon’s failed attempt to sue Ripple to get its money back.
Ripple XRP Use for money transfer
XRP is a type of digital money that Ripple uses to send money internationally. It is one of the largest cryptocurrencies available, valued at approximately $37.8 billion.
Ripple uses XRP as a middle currency when transferring money between different currencies, such as from US dollars to Mexican pesos. This helps solve the problem of having money ready in advance on the receiving end of a wire transfer.
Ripple claims that using XRP enables extremely fast money transfers, taking only a fraction of a second. But the recent ruling is still not a complete win for Ripple. While the judge said XRP does not qualify as a “security,” she added that Ripple’s institutional sales of XRP qualify as securities.
Alderoty said this part of the ruling would not significantly affect Ripple’s current business operations, as most of its customers are based outside the United States. “We’ll study the judge’s decision, we’ll look at our customers’ needs to look at the market, and see if there’s a situation here that meets the four corners of what the judge found when it comes to institutions, ” he said.
Bhushan is a FinTech enthusiast and has a good flair for understanding financial markets. His interest in economics and finance draws his attention to the new emerging Blockchain Technology and Cryptocurrency markets. He is in a continuous learning process and keeps himself motivated by sharing his acquired knowledge. In his spare time he reads thriller fiction novels and sometimes explores his culinary skills.
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This post Ripple will talk to banks to boost the use of XRP for settlements
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