Is XRP the Future of Global Payments?
Abraham George Crypto Musings
I have been writing about XRP for over two years, and I have not spent as much time and analysis on any other single instrument as I have on understanding XRP and some other related utility tokens. By following the story on XRP, I have learned so much about the US judicial system that I otherwise wouldn’t have.
The last article I wrote on Ripple (XRP) was on October 23, 2022. Since then, a lot has happened, and we are now at an inflection point. The turn of events is so favorable for Ripple that a summary judgment can happen anytime in its favor. Both the SEC and Ripple have filed their motions for summary judgment, and from everything I have observed, the facts and the law are on Ripple’s side. The recent outcomes of the Libra and Voyager cases also stand in good stead for Ripple.
Judge Analisa Torres, who is presiding over this case, has been very judicious and fair to both parties. Where required, Judge Torres has reprimanded the SEC for its sloppiness and lack of respect for the law.
Having followed this case so closely, I am very familiar with all the influencers, lawyers, outside commentators, media personalities, company executives, and the XRP army followers.
In my opinion, three major people stand out in bringing out the SEC’s bluff and crookedness. The first is John Deaton, an independent lawyer, and ex-Marine. The SEC tried its level best to keep John Deaton out of the case, but Judge Torres overruled the SEC’s demands not to accept Deaton as an amicus. To allow an "Amicus Curiae" in a court proceeding has existed since Roman times. An "Amicus Curiae" is a "friend of the court" who assists the court on points of law in a particular case. Apart from their army of eminent lawyers, the Ripple company couldn't have been luckier to get such a thoughtful and knowledgeable person to represent about 76,000 investors and 3,500 investors who have filed an affidavit to the court, confirming that they did not invest in XRP based on the performances of Ripple as a company or thinking that their investment is a security. Deaton has done a great job in educating Judge Torres about the intricacies of the instrument and publicly announcing the proceedings of the case, especially how wrong the SEC has been in every move it has made to counter the arguments of the Ripple lawyers.
The second person who stands out is Dr. Roslyn Layton, a leading international expert on technology policy and a regular contributor to Forbes magazine. She has been extremely critical of the SEC's policies, especially Chairman Gary Gensler. If you want to understand the SEC's high-handedness and lack of respect for the law, look up her past articles relating to Ripple in Forbes. She has now filed a motion to Judge Torres to grant her public access to former SEC executive William Hinman’s controversial document relating to XRP. Jason Foster, founder, and president of Empower Oversight, has expressed huge support for Layton.
Finally, we have Judge Analisa Torres. I don’t think Ripple could have asked for a fairer and more detailed person than Judge Torres for this case. Judge Torres has presided over many landmark cases in the past and understands the importance of this case and its impact on the financial industry.
There was no fraud involved with Ripple, and Ripple had gone time and again to the SEC for clarity to abide by the law. The SEC never gave them any clarity, and after eight years in business, they decided to sue Ripple in the most sinister way. The former SEC Chairman, Jay Clayton, sued Ripple on the last day he was leaving the office without waiting to face what could be the outcome.
In their wildest imagination, the SEC never expected Ripple to put up such a strong fight, at a cost of more than $100 million in legal fees, exposing all the corruption and SEC’s ruling by enforcement.
As it stands, the latest expert opinion from John Deaton is that Ripple could get an outright win, in which case, Ripple will be the only cryptocurrency in the US with regulatory clarity. That means a lot. This could happen anytime between now and the end of June, but most likely, it will be before the end of April.
For those who are interested and don't know much about XRP, you may want to read up on my old articles. In a time such as this, where inter-bank and cross-border transfers, plus liquidity, have become such a big issue, there could have been no better technology than XRP to come to the rescue.
Ripple is an enterprise blockchain company that focuses on using blockchain technology and digital assets to remove friction in cross-border payments. What many may not know is that Ripple is currently working with more than 40 central banks in aligning with their CBDCs. They have been in business for more than ten years, and when they started, their focus was mostly on building networks. In the beginning, they faced big resistance and skepticism, but as digital assets have become mainstream, they are growing by leaps and bounds. In the last two years since they have been sued by the SEC, they had their best two years in their international business. While they still have not gotten regulatory clarity in the US, they are widely accepted in Japan, Singapore, Switzerland, the UK, UAE, Brazil, Australia, NZ, and many African countries. About 300 banks or more are working with them. The moment they have regulatory clarity, among the leading US banks, BOA has shown interest in adopting their "on-demand liquidity" tool.
The ODL will stand as one of the biggest innovations in worldwide payment systems. Once it becomes ubiquitous, banks should get away with most of the correspondent banking and "nostro, vostro" accounts. Currently, Swift only sends a message about payments, and banks pay out of their liquidity. Still, with Ripple Net XRP, payment settlement will also happen instantaneously, all at a fraction of the cost in under three seconds. The estimated funds that are locked up in "nostro, vostro" accounts worldwide are around $28 trillion dollars. Imagine all that money becoming freely available in the system. Here's another thought: with this technology, all salaries can be paid on a daily basis. That should free up a lot of capital as well and improve liquidity.
In the last few days, XRP prices shot up by 25% in a single day. It could be on the back of some insiders expecting a favorable outcome for Ripple in the SEC, or the market adjusting to the recent increases we have seen with Bitcoin and Ethereum. As Blockchain Week is underway in Paris, this is what the President of Ripple, Monica Long, had to say about technologies like Ripple: "Adopt or Die."
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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.