A US digital currency is coming soon
Abraham George Macro Musings
There was a time I was frequently writing about XRP and CBDC. Now the ducks are lining up for some major changes that should benefit XRP and the introduction of a US CBDC is not that far away.
Firstly, I am not sure how many of you were following the SEC’s lawsuit with XRP. This lawsuit has gone so horribly wrong for the SEC - people are flabbergasted by the lack of professionalism and inefficiency of such an important agency like the SEC. I don’t want to get into much of the details of this case as that will drag this report too long.
All I can tell you is that at every step, the SEC ended up putting their foot in their mouth. The SEC lawyers displayed exemplary incompetence and they were really not prepared with what the Ripple lawyers could come up with. About 70 rulings on this case so far have gone in favour of XRP. It is almost certain that the SEC has lost the case which is a very rare happening and the case will be closed anytime before Nov 18, 2022. This should really boost Ripple and XRP in the coming periods.
The funny thing is I wrote so much of the above and went to sleep. When I checked the markets at midnight I saw this biggest news most XRP holders were waiting for. Judge Analisa Torres, the main judge presiding over this case has denied SEC’s request for denying Ripple the ‘fair notice defense’. This has huge implications. This may put an end to the SEC’s way of regulation by enforcement approach. It looks like the SEC never provided any fair notice to Ripple since 2013 despite their repeated meetings with the SEC in their effort to distribute XRP. With this latest development, it looks like things will move into a settlement or a clear victory for Ripple much before the middle of November 2022. The immediate reaction to this news was for XRP to move up by almost 10%.
But there is more. Two days back we received the President’s Executive order on Ensuring Responsible Development of Digital Assets. The President’s order tasks multiple agencies including the Treasury Department, Fed, Commerce Department, Financial Stability Oversight Council, SEC, and CFTC. They are expected to come together with a viable solution in the next 7 months.
The main areas cover data privacy and security; financial stability and systemic risk; crime and national security; financial inclusion and equity; energy demand and climate change. Finally the ability to exercise human rights. The full report is a bit lengthy and those interested may look it up.
The United States has been way behind the development of the CBDC but now it wants to make sure that they are at the forefront of responsible development and design of digital assets. They also want to make it clear that the technology that underpins new forms of payment and capital flows in the international financial system will promote democratic values, the rule of law, privacy, the protection of consumers, investors, businesses with interoperability on digital platforms. Many players could be lending support to this major endeavor from the Fed and the Treasury department.
There will be many digital currencies bidding for a piece of the pie in this mammoth task but XRP in all aspects should be one of the biggest beneficiaries. Firstly XRP so far has projected itself to be a bridge currency. Their main goal has been to make mark cross-border funds transfers and payments cheaper, faster and safer. This is all mentioned in the executive order. With XRP’s On-Demand Liquidity (a subject of its own to study) - it promises to eliminate all correspondent banking and free up almost 28 trillion dollars that lie idle in Nostro and Vostro accounts - it could be a big boon to banking productivity and efficiency.
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Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and multi-billion dollar portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund. Currently, he is a co-founder of a new hedge fund where foreign citizens can invest in Indian growth stocks like Tanla operating in hyper-growth markets like CPaaS.