Ripple Optimistic About U.S. Financial Institutions Embracing XRP After Landmark Ruling

Ripple Optimistic About U.S. Financial Institutions Embracing XRP After Landmark Ruling

Ripple, a blockchain startup based in San Francisco, is optimistic that U.S. financial institutions will now show interest in adopting XRP for cross-border payments following a significant ruling that determined XRP itself is not necessarily a security.

Stu Alderoty, Ripple’s general counsel, revealed in an interview with CNBC last week that the company expects to initiate discussions with American financial firms regarding the adoption of its On-Demand Liquidity (ODL) product, which utilizes XRP for money transfers, in the third quarter.

The recent ruling by a New York judge marked a turning point for Ripple, as it clarified that XRP, a cryptocurrency closely associated with the company, is not inherently a security, challenging claims made by the U.S. Securities and Exchange Commission (SEC) against Ripple.

Ripple has been engaged in a three-year battle with the SEC over allegations that it conducted an illegal offering of $1.3 billion worth of XRP. The company vehemently disputed these claims, asserting that XRP should be treated as a commodity rather than a security.

However, Ripple did experience setbacks due to the legal dispute, losing customers and investors along the way. Notably, MoneyGram, a prominent U.S. money transfer giant, terminated its partnership with Ripple in March 2021.

Despite the challenges, Alderoty is confident that American banks will now reconsider using Ripple’s ODL product. He expressed hope that the ruling would give potential financial institution customers the confidence to discuss their real-world cross-border payment issues, such as high fees, and consider implementing Ripple’s solutions.

Ripple primarily sources its business from outside the U.S., although it has around half of its 900 employees based in the country.

XRP, the fifth-largest cryptocurrency by market capitalization (valued at $37.8 billion), serves as a bridge currency in Ripple’s money transfer process, facilitating seamless conversions between different fiat currencies.

While the recent ruling provided some relief for Ripple, it wasn’t a complete victory. The judge acknowledged that certain sales of XRP to institutions did qualify as securities transactions due to common enterprise and profit expectations.

Alderoty acknowledged that Ripple didn’t achieve an absolute win but assured that the company would carefully study the ruling’s implications for its business. He emphasized that the present business setup, focused on customers outside the U.S., would likely remain unaffected by this aspect of the ruling.

Ripple plans to examine the market and its clients’ needs in light of the court decision, with the hope of generating meaningful conversations that could potentially lead to new business opportunities in the United States.