In this illustration, a visual representation of the digital cryptocurrency Ripple is displayed on January 30, 2018 in Paris, France.
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Blockchain startup Ripple is confident that US banks and other financial institutions in the country will begin to show interest in adopting it. XRP cryptocurrency in cross-border payments after a landmark ruling determined that the token itself is not necessarily a security.
The San Francisco-based company is expected to begin negotiations with US financial firms on the use of its On-Demand Liquidity (ODL) product, which uses XRP for remittances, in the third quarter. , Stu Alderoty, Ripple general counsel, told CNBC in an interview last week.
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Last week, a New York judge issued a landmark ruling against Ripple determining that XRP itself is “not necessarily a security on its surface,” partially opposing statements from the Commission. US Securities and Exchange against the company.
Ripple has been battling the SEC for the past three years over allegations from the agency that Ripple and two of its executives conducted an illegal $1.3 billion offering through the sale of XRP. Ripple refutes the claims, asserting that XRP cannot be considered a security and more like a commodity.
As a result, Ripple’s business was affected, the company lost at least one customer and investor. MoneyGram, the American money transfer giant, abandoned its partnership with Ripple in March 2021.
Meanwhile, Tetragon, a UK-based investor who previously backed Ripple, has sold its shares back to Ripple after an unsuccessful attempt to sue the company for cash back.
When asked if the ruling means US banks will return to Ripple to use its ODL product, Alderoty said: “I think the answer is yes.”
Ripple also uses blockchain in its business to send messages between banks, as a blockchain-based alternative to Swift.
“I think we hope that this decision will give financial institution clients or potential clients the comfort of at least coming in and starting a conversation about the problems they’re having in the future. their business, the real-world problems of moving value across borders without incurring obscene fees,” Alderoty told CNBC on Friday.
“Hopefully this quarter will generate more conversations in the US with customers, and hopefully some of those conversations will actually turn into real business,” he added.
Ripple now derives most of its business from outside the US, with Alderoty previously telling CNBC that,[Ripple]Its customers and revenue are both driven outside of the US, although we still have a lot of employees inside the US,” he added.
Ripple has over 750 employees globally, with about half of them based in the US
XRP is a cryptocurrency that Ripple uses to transfer money across borders. It is currently the fifth largest cryptocurrency in circulation, with a market capitalization of $37.8 billion.
The company uses the token as a “bridge” currency between transactions moving from one fiat currency to another — for example, US dollars to Mexican pesos — to solve the problem. need a pre-funded account on the other end of the transfer to wait for the funds to be processed.
Ripple says XRP can enable transfers in a split second.
However, the ruling does not represent an outright victory for Ripple. Although the judge declared XRP not a security, they also said that some token sales did qualify as securities transactions.
For example, about $728.9 million in XRP sales to institutions the company partnered with qualified as securities, the judge said, stating that there was a common business, profit expectations.
Alderoty admits that it is not an outright win for Ripple and that the company will study this decision in the near term to see how it affects its business.
“She [Judge Analisa Torres] noticed – although we disagreed with her – that our previous sale directly to an institutional buyer had the properties of the stock and should have been registered,” he said.
He said Ripple’s business will currently not be affected by that part of the ruling because its customers are primarily located outside the US.
“We will study the judge’s decision, we will look at the client’s need to look at the market and see if there are situations here that adhere to the four corners of what the judge found when he said: organizations or not,” he said.
