Brad Garlinghouse, CEO of Ripple, came yesterday for an Interview of CB Insights, Future of Fintech conference and made it clear repeatedly that XRP is not a security within the meaning of the American law and the SEC. In addition, he stated that at least one Bank xRapid and XRP in 2018.
William Hinman, Director of the division of Corporation Finance at the SEC, has declared a few days ago, that neither Bitcoin nor Ethereum are securities. The decisive criterion for the SEC was that the value of the two crypto-currency is the actions of a third party, a company. If the operation of the network is completely decentralised, it does not fall, the project is in the jurisdiction of the SEC, so Hinman.
Brad Garlinghouse has taken up this argument and explained that, in his view, three arguments, which suggest that XRP is not a value paper. He explained that XRP can’t be securities, because the San Francisco-based company Ripple Labs is not associated with XRP.
- Ripple Labs developed the only solutions on the Basis of the Open Source technology of XRP. If Ripple, the company no longer would exist, will work with the XRP Ledger.
- XRP is a Open Source and decentralized technology.
- The purchase of XRP does not mean that the Investor acquires shares in the company Ripple.
Garlinghouse also reiterated his concerns, which he has compared with Bitcoin and doubted the decentralized nature and, therefore, the classification of the SEC (translated freely):
I own Bitcoin and have a Bitcoin bull, but we have to recognise that when we talk about whether something is centralised and decentralised, that control is the key element. When three mining companies in China control more than 50% of the Hash Rate of Bitcoin, as a decentralized Bitcoin is.
Cooperation with a number of banks and financial service providers
On Reddit was speculating about why Ripple has already been announced for some time, no new partnerships. After it was reported in the past few months, practically every week new partnerships of Ripple, had become known in the last few weeks, not a single partnership. The reasons can only be speculated. On Reddit, for many users, however, clear that Ripple does nothing without reason and there must be a good reason.
If Ripple confidentiality has to sign declarations, in order to keep the information confidential or whether Ripple would first like to build up a strength of infrastructure and base to announce several partnerships at once, are just a few of the speculation that there is.
This speculation has fuelled garling house now, as he said on the question of whether and when XRP banks will ever be used (freely translated):
We expect that at least one Bank will still use this year XRapid. 100%. Why? It is faster and it is cheaper.
He explained in the Interview that he expects the large banks and liquidity providers, such as Western Union, which have developed decades of their technology, require immediately on xRapid and XRP. In particular, for financial institutions, the need to rely on liquidity providers for cross-border payments, is xRapid be timely, interesting, garling house.
xRapid, XRP and liquidity
Liquidity plays in the context of national and cross-border transactions, a very important role. In the case of domestic payments, the liquidity is usually very high because the unwinding of banks sending the same currency. In the case of international transactions, however, the liquidity tends to be low, since the exchange of two different currencies at the time – and thus price deviations can lead. This undermines the stability of the transaction, the liquidity and increases the cost.
The unwinding of the financial institutions have to hold, due to the low liquidity of nostro accounts on both sides of a transaction, in the respective national currency and active ready. These accounts, however, are associated with high costs, which is why only a few banks have nostro accounts and international transactions. “Exotic” transactions of rare and minor currencies need to be part of multiple trading parties, wherein each party’s costs for the transaction. Many smaller to medium-sized banks and payment providers to pay, therefore, prefer a fee in order to use the systems of the big banks (liquidity providers), as to entertain themselves nostro accounts.
This problem xRapid and the XRP tokens to put. XRP will replace the nostro accounts as a universal “bridge currency”, the transactions within a few seconds, and thus provides a higher liquidity for financial institutions.
A financial institution needs to focus thanks to XRP on exchange rates for a few couples (XRP) and can save money and no longer has to rely on liquidity providers and does not have to pay more fees for their services. The xRapid-solution of the Ripple is, therefore, an On-Demand liquidity solution.
The XRP tokens is the Central Element in this Ecosystem, by the Token acts as a bridge currency, and the need for cost-intensive nostro accounts eliminated. Simply put, a transaction in the works so that the transmitter-exchanged currency to XRP, XRP sent, and then in the recipient’s currency is exchanged. The transaction is the entire process traceable.
The full, very interesting Interview of CB Insights, Future of Fintech:
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