Brad Garlinghouse’s cryptocurrency company Ripple was in the news this week, as it introduced a stablecoin that is based on the US dollar in an attempt to upend a market where the top two players control almost 90% of the value.
The project is a significant turning point for Ripple, which in 2023 won a historic battle against the United States Securities and Exchange Commission (SEC).
It will have a difficult time breaking into a crowded market, though, as the two largest companies, Tether and USD Coin (USDC), control almost 90% of the market capitalisation, according to CoinGecko data.
According to Ripple, the stablecoin, RLUSD, will be accessible worldwide on a number of platforms, such as Uphold, Bitstamp, Bitso, MoonPay, Independent Reserve, CoinMENA, and Bullish.
Stablecoins are virtual currencies that are intended to maintain a fixed value. Traditional currencies like the US dollar or the euro serve as their backing.
They may be better suited for payments and converting cryptocurrency tokens into fiat money because they are not subject to the wildly volatile prices of ether and bitcoin.
According to Ripple, all RLUSD tokens are fully backed by US government bonds, dollar deposits, and cash equivalents.
Foreign Collaborations Galore Amid IPO Talks
Ripple has also announced a partnership with the International Rescue Committee (IRC), one of the world’s most trusted humanitarian organisations helping people affected by crises to survive, recover and rebuild their lives. Together, Ripple and the IRC will explore how Ripple’s cross-border payments solution and pending RLUSD stablecoin can be used in the delivery of humanitarian aid.
Ripple has pledged a USD 1 million multi-year commitment to help the IRC. This funding underscores their joint exploration of blockchain technology, including Ripple’s global payments network and open-sourced solutions built on XRP Ledger, in two key areas: cash relief programmes and cross-border fund transfers.
Despite the ongoing tussle with the SEC, Ripple’s leadership has remained largely compliant with blockchain payment-related regulations, combined with the IRC’s expertise in delivering impactful humanitarian aid across 40-plus countries, including over USD 70 million in cash and voucher relief. These crucial factors make the partnership a powerful tool with the potential to transform aid delivery at scale.
Meanwhile, Turkish banking giant Garanti BBVA Kripto has entered into a partnership with Ripple and IBM to provide enhanced and secure crypto trading and custodial services to its clients. This is the first major customer after the blockchain firm launched its “Ripple Custody Solution” earlier this month.
Through this strategic collaboration, Garanti BBVA seeks to bring high performance and security to its crypto asset trading platform. After its successful pilot in 2023, the bank is willing to roll out its services to its entire customer base of over 14,000 users.
The Turkish bank will now use the combined solution from Ripple Custody and IBM thereby deploying and managing an institutional-grade management infrastructure with end-to-end security. The banking giant said that this would help them protect their applications, data, and private keys.
Furthermore, the solution will also incorporate embedded Hardware Security Modules (HSMs) with top-tier security certifications, alongside a flexible governance framework designed to eliminate single points of compromise. These combined features will ultimately help in reducing risks posed by different malicious actors while offering a robust defence for customers.
Despite its ongoing legal tussle with SEC, the blockchain firm is not only serving industry players with unique solutions (apart from introducing innovations in the crypto space), but it has remained on track for its IPO launch, which may happen in the next 12 months.
Business leader and consultant Jake Claver told the Crypto News Flash that the IPO, if launched, may have as much influence as Amazon’s IPO in 1997. He believed that Ripple was well-positioned for an IPO due to its prominence in the blockchain and Fintech industry. He highlighted that Ripple is particularly recognised for its cross-border payment solution, which serves over 300 financial institutions worldwide.
Claver also acknowledged XRP’s ability to settle transactions faster and cheaper than the SWIFT payment network. Just as Amazon was known as an online bookstore before its IPO, Claver noted that Ripple is recognised for its blockchain solutions. As a result, he believes Ripple could do more with an IPO launch.
He noted that Amazon raised USD 54 million, which allowed it to expand into new markets. Essentially, Amazon expanded from books into electronics, clothing, and eventually cloud computing through AWS. Claver thinks Ripple faces a similar scenario to Amazon if it decides to go public. According to him, the funds raised might help the firm scale operations and enter new markets in the blockchain space.
Claver further disclosed Ripple could use IPO funds to acquire other companies and expand its offerings, similar to Amazon’s purchase of Whole Foods and Twitch. Claver highlighted Ripple’s acquisition of Metaco as a big step in its pursuit of market expansion. Ripple has already improved its institutional-grade digital asset custody services by including Metaco’s solutions in its platform.
Additionally, funds raised through a listing would enable Ripple to accelerate research and development while improving the XRP Ledger. Ripple can explore new applications like smart contracts, tokenized real-world assets, and Central Bank Digital Currencies (CBDCs).
However, Ripple’s ongoing legal battle with the US SEC can be a major dampner for the IPO joy. In fact, CEO Brad Garlinghouse has doubts about the firm listing an IPO in the world’s largest economy, as he cited SEC Chair Gary Gensler’s actions against the virtual currency as a major factor affecting his thinking.
Ripple vs SEC Continues
Brad Garlinghouse has remained adamantly against the US SEC, specifically with reference to its ongoing litigation of XRP and the appeal associated with the case of Ripple.
His latest reaction followed a lawsuit filed by crypto derivatives platform Bitnomial against the SEC concerning XRP futures. Bitnomial’s lawsuit against the SEC is based on the agency’s assertion that it shares supervision of XRP futures. The Commodity Futures Trading Commission (CFTC) should be the only agency responsible for regulating these contracts, according to the exchange.
Bitnomial argues that the SEC is going beyond its legal authority by claiming that XRP futures are not securities. Many cryptocurrency companies contend that the SEC’s actions impede innovation and go beyond its statutory mandate, and this case highlights the growing tensions between the two organisations. Echoing Bitnomial’s stance, Garlinghouse expressed his continued worries about what he sees as the SEC’s persistent abuse of authority.
Since the SEC sued the cryptocurrency company in December 2020 for allegedly conducting an unregistered securities offering by selling USD 1.33 billion worth of XRP, Ripple has been subject to legal challenges of its own. According to Ripple, XRP is not a security.
A partial victory for Ripple was achieved in July 2023 when District Judge Analisa Torres decided that XRP programmatic sales on public exchanges did not qualify as securities.
She did decide, though, that direct sales to institutional investors might qualify as securities. SEC filed a formal notice of appeal against the ruling earlier October 2024, prompting Ripple to file a cross-appeal.
The SEC appeal focuses on programmatic sales of XRP on digital asset platforms and distributions to Ripple employees, arguing that these constitute unregistered securities offerings.
A victory for Ripple could further solidify the argument that not all cryptocurrencies are securities, potentially paving the way for greater innovation and adoption within the industry. A final decision from the appeals court is not expected until mid-2025.
Meanwhile, CEO Garlinghouse has conceded his company should have engaged with the regulators earlier, and now it and the crypto industry are playing catch-up after being on the receiving end of legal enforcement actions.
Garlinghouse, who thinks that the US “is a laggard” on crypto regulations compared to other countries, has blamed SEC Chair Gary Gensler for starting a “reign of terror” against the industry and accused Senator Elizabeth Warren of “spreading misinformation” about the virtual currency.
He believes that it is “just inevitable” that XRP will be offered in a spot exchange-traded fund (ETF) in the United States. As per Garlinghouse, over USD 21 billion has flown into spot Bitcoin ETFs since January 2024, which “clearly demonstrates there’s demand from institutions, there’s demand from retail to access this asset class.”
“XRP interest has grown. You’ve seen two or three ETF filings happen around XRP, and to me, it’s just inevitable you’re going to see not just Bitcoin and Ether, you’re going to see an XRP ETF,” he noted during a Bloomberg Television interview.
Garlinghouse believed an XRP fund “will do quite well,” as he claimed the cryptocurrency has a “very interested and active community” both in the United States and abroad. He further considered crypto ETFs as part of a trend of “more and more institutionalised participation in the crypto industry.”