Last week, blockchain startup Ripple won historic victory over the US Securities and Exchange Commission (SEC). Although the process is far from over, XRP is currently not recognized as a security.
The company now expresses confidence that US banks and other financial institutions will begin to show interest in using XRP for cross-border payments.
In an interview with CNBC last week, Ripple General Counsel Stew Alderoti said that Ripple plans to discuss with U.S. financial firms in the third quarter the use of its On-Demand Liquidity (ODL) product. This product uses XRP for efficient money transfers.
When asked if this decision would force US banks to resume using the Ripple ODL product, Alderoti replied in the affirmative, stating, “I think the answer to that question is yes.” Next he added :
“I think, and we hope, that this solution will allow clients of a financial institution or potential clients to at least come in and start a conversation about the challenges they face in their business, the real challenges in terms of moving value across borders without high commissions. I hope there will be a lot of customer conversations this quarter in the United States, and I hope that some of those conversations will actually turn into real business.”
Amid a legal battle with the SEC, over the past two and a half years, Ripple has been doing most of its business outside the US, and several Ripple partners in the US have severed ties with the company. Most notably, in March 2021, US money transfer giant MoneyGram dropped its partnership with Ripple and instead partnered with Stellar.
In addition, Tetragon, a British investor who previously backed Ripple, sold his stake back to the company. This decision came after Tetragon’s failed attempt to sue Ripple.
Using Ripple XRP for Money Transfers
Ripple uses XRP as an intermediate currency when transferring money between two other assets or instruments, for example, from US dollars to Mexican pesos. This helps to solve the problem of the need for pre-financing between the parties to the transaction.
But the recent decision is still not a complete victory for Ripple. While the judge said that XRP is not considered a “security,” she added that Ripple’s XRP institutional sales qualify as securities.
Alderoti mentioned that this part of the ruling would not have a significant impact on Ripple’s current business operations, as the majority of its customers are located outside the US.
“We will study the judge’s decision, we will look at the needs of our clients, we will look at the market and see if there is a situation here that fits the four corners of what the judge found when it comes to institutions,” he said.