Ripple's General Counsel Stu Alderoty informed CNBC that the firm is sure U.S. banks will start to utilize its XRP cryptocurrency for global transfers following a judge awarding it a partial success in its quarrel with the SEC. The ruling that XRP wasn't in itself a cryptocurrency has big repercussions for the digital asset sector. Nonetheless, it wasn't a total triumph for Ripple as the judge also stated that Ripple's sales of XRP to institutional purchasers do represent unregistered sales of securities.
Following the landmark ruling which determined that Ripple's XRP cryptocurrency is not necessarily a security, the San Francisco-based startup is confident it will spark renewed interest from U.S. banks and other financial institutions in adopting its On-Demand Liquidity (ODL) product. Stu Alderoty, Ripple's general counsel, told CNBC in an interview last week that discussions with American firms regarding the usage of the product to facilitate money transfers with XRP should begin in the third quarter. The ruling contested claims from the U.S. Securities and Exchange Commission that Ripple and two of its executives conducted an illegal offering of $1.3 billion worth of XRP. Ripple's business has been impacted, with the money transfer giant MoneyGram ending their partnership in March, and Tetragon, a U.K.-based investor, selling back its stake, after failing to sue Ripple for a cash refund. When asked if the ruling meant U.S. banks would return to Ripple, Alderoty replied positively, and expressed hopes that the decision would give financial institution customers the confidence to come in and start a conversation, to solve real-world problems in terms of cross-border payments without incurring large fees. Most of Ripple's current business is sourced outside of the U.S., while it still employs many workers in the country.
Ripple, with over 750 employees globally and about half of them located in the U.S., utilizes XRP as a cryptocurrency to move money across borders. The fifth-largest digital currency in circulation, XRP has a market capitalization of $37.8 billion. Ripple claims their token can quickly facilitate money transfers from one fiat currency to another, such as U.S. dollars to Mexican pesos, avoiding the need of pre-funded bank accounts on either side. Judge Analisa Torres decided that while XRP was not a security, certain sales of the token did qualify as securities transactions and should have been registered. About $728.9 million of sales of XRP to institutions with which Ripple works with, per the judge, did count as securities as there was a common enterprise with expectations of a profit. Though not a total win for Ripple, Brad Garlinghouse, CEO of Ripple, stated their current business would not be affected by this ruling as their customers primarily are from outside of the U.S. Moreover, Ripple will further investigate the verdict to see how their business should be adjusted to comply with the judgment.
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