Cryptocurrencies are growing faster than ever and the industry has garnered a lot of attention, whether it is of the regulators or the businesses looking to exploit this disruptive technology to enhance their services. Ripple is definitely a major player in the scene when talking about real-world implementation. A lot has been happening with it over the last year.
Leading the remittance market
The company has been leading the remittance market with its on-Demand Liquidity product (ODL). Previously known as xRapid, ODL has been leveraging the company’s native token XRP, to function as a bridge between two different currencies thus eliminating the need for any type of pre-funding.
ODL has sparked a lot of customer interest over the last year. The new payment system has been adopted by many businesses and banking institutions. Moneygram, the global money transfer giant has been implementing Ripple’s ODL in its daily operations since June 2019. Since then its use has grown to handle 10% of MoneyGram’s total transaction volume between the United States and Mexico.
According to the quarterly markets report published by Ripple insights, ODL saw noticeable growth in the last quarter of 2019. The service handled 550% more value in Q4 of 2019 than it did in Q3. In raw transactions, those services saw a 290% increase inactivity. In less than a year, over 24 financial companies signed on for ODL, including Viamericas, FlashFX, and Interbank Peru.
According to Ripple CEO Brad Garlinghouse, the company could also go public within a year. Last month, Ripple had raised a staggering $200 million in a Series C funding, which is the last step before a company goes public. The Series C round valued the blockchain firm at $10 billion.
Garlinghouse told the Wall Street Journal, at the World Economic Forum in Davos, on Thursday that an initial public offering (IPO) is a “natural evolution” for the company. He said:
“In the next 12 months, you’ll see IPOs in the crypto/blockchain space. We’re not going to be the first and we’re not going to be the last, but I expect us to be on the leading side… it’s a natural evolution for our company.”
XRP Quanto Swap coming on BitMEX
Adding to all the progress made, popular crypto exchange BitMEX is set to launch an XRP-USD Quanto swap in an attempt to capture the booming crypto derivatives market.
A quanto swap is a cross-currency interest rate swap where one party pays the other a foreign interest rate. When the contract expires, the amount gets settled in cash at a pre-defined exchange rate. These swaps can be beneficial for investors in search of liquidity and where they can post a margin in their preferred currency.
The XRP/USD product will go live on February 5. Further details would be available on Testnet that is about to begin on Friday.
XRP falling behind
Despite the progress Ripple is making, its native cryptocurrency XRP continues to drop. According to the report, the total XRP sales in Q4 of 2019 were $13.08 million. This was a more than 80% drop from $66.24 million in sales in the previous quarter.
According to Ripple, the decline was not unexpected as Ripple had paused their programmatic sales program in mid-2019. The company was already expecting the drop in sales as it had then stated:
“In the short term, this means Ripple’s sales of XRP in Q2 2019 will be substantively lower (as a percentage of reported volume) than in the previous quarter—with our stated target of 20bps for programmatic sales of XRP volume, as reported by CoinMarketCap, likely dropping to less than 10bps. Longer-term, by being more demanding about our expected standards for market structure and reporting, we hope to begin raising the bar industry-wide.”
The price of XRP has been decreasing throughout 2019 dropping more than 40% trading at $0.217 at press time.
One of the contributing factors in the token’s downward rally can be the regulatory uncertainty that has plagued XRP for a long time. The situation was worsened when Ripple faced a class-action lawsuit that accused it of an unregistered sale of securities.
On January 14, 2020, the Commodity Futures Trading Commission (CFTC) Chairman Heath Tarbert said that it is not clear whether XRP is a security or a commodity. Speaking to American news outlet Cheddar, Tarbert stated:
“It’s unclear. Stay tuned, I’d say. Part of the issue is our jurisdiction we share with the SEC [Securities and Exchange Commission]. If it’s a security, it falls under their jurisdiction. If it’s a commodity, it falls under ours.”