SUMMARY
- Following a recent landmark ruling, Ripple anticipates U.S. banks will show renewed interest in incorporating its cryptocurrency XRP for cross-border transactions.
- Ripple remains committed to its stand that XRP is more like a commodity, rather than a security.
- Despite some sales of XRP qualifying as securities transactions, Ripple sees an optimistic future.
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In a remarkable turn of events, Ripple, the trailblazing blockchain start-up, believes U.S. banks and associated financial institutions will soon show keen interest in incorporating its cryptocurrency XRP into their cross-border payment operations. This surge of confidence arises from a milestone legal ruling, which attested that XRP doesn't inherently qualify as a security.
Ripple, based out of San Francisco, anticipates initiating dialogues with U.S. financial organizations about the utilization of its On-Demand Liquidity (ODL) product, leveraging XRP for fund transfers. Ripple's chief legal officer, Stu Alderoty, conveyed this optimistic outlook to CNBC after a groundbreaking ruling from a New York judge. This ruling challenged, to some extent, the accusations laid by the U.S. Securities and Exchange Commission (SEC) against Ripple, concluding that XRP doesn't categorically count as a security.
For the past three years, Ripple has been combatting the SEC over allegations accusing the company and two of its executives of illegal securities offering via XRP sales, amounting to $1.3 billion. Ripple stood its ground, asserting that XRP is more comparable to a commodity rather than a security.
These legal conflicts dealt a blow to Ripple's operations. For instance, MoneyGram, the prominent money transfer firm, severed ties with Ripple in March 2021. Furthermore, a U.K.-based investor, Tetragon, who had previously backed Ripple, returned its shares after an unsuccessful legal attempt to redeem its cash.
Reacting to the recent ruling and its implications for the U.S. banks' engagement with Ripple's ODL, Alderoty expressed a positive outlook, hinting at a potential reestablishment of ties. Moreover, Ripple's blockchain-based alternative to Swift, used for bank-to-bank communication, also has immense potential.
Ripple's clientele and revenue are mostly generated outside the U.S., even though it houses a significant portion of its workforce stateside. Ripple's employees are over 750 globally, with nearly half based in the U.S. The company uses its cryptocurrency, XRP, now the fifth-largest with a market cap of $37.8 billion, to facilitate cross-border money transfers. However, the recent ruling has not been an outright victory for Ripple. The judge identified some sales of XRP as qualifying as securities transactions, requiring Ripple to recalibrate its strategy in light of the decision.
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