Ripple is convinced that U.S. financial institutions will start to use its XRP digital asset for cross-border transfers after a judge gave them a partial win in its battle against the SEC, Stu Alderoty, General Counsel, told CNBC.The judge determined that XRP isn't necessarily a cryptocurrency, which could have a great effect on the digital money industry.It wasn't a complete triumph for Ripple, though – the judge decided that sales of XRP by Ripple to institutional purchasers actually are unregistered sales of securities.
Ripple, a blockchain startup, is confident that U.S. banks and other financial institutions will start showing interest in adopting its XRP cryptocurrency for cross-border payments after a judge ruled that the token is not necessarily a security. Stu Alderoty, Ripple's general counsel, told CNBC last week that talks with American financial firms about using its On-Demand Liquidity (ODL) product, which uses XRP, will begin in the third quarter. Alderoty further stated that the ruling should give customers of financial institutions comfort to commence conversations about the problem of moving value across borders without incurring excessive fees. He added that Ripple expects some of these conversations to lead to actual business this quarter. At present, the majority of Ripple's business comes from sources outside of the U.S., despite the company still employing many in the country.
Ripple employs around 750 people worldwide, with approximately half of them located in the U.S. XRP is a digital asset used by Ripple to move funds across borders. At present, it is the fifth-largest cryptocurrency in circulation, with a market worth of $37.8 billion. The company makes use of the token as a "bridge" currency in transfers between distinct fiat currencies, like U.S. dollars to Mexican pesos, to tackle the issue of needing pre-funded accounts at the other end of the transaction to wait for payment processing. Ripple states XRP can facilitate money movements in an instant. The ruling, however, did not deliver a conclusive win for Ripple. While the judge concluded XRP was not a security, they also noted that some sales of the token did fall under securities transactions. For example, about $728.9 million of sales of XRP to institutions the company was associated with were identified as securities, the judge stated, because there was a common enterprise and an expectation of profit. Alderoty accepted that the ruling was not a definite win for Ripple, and said the company would investigate the decision to consider how it influences its operations. He added that Ripple's business would remain unaffected as the majority of its customers reside outside the U.S. He noted that Ripple would analyze the judge's decision, look into customers' needs, consider the market, and determine if the circumstances satisfy the judge's criteria when dealing with institutions.
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