Ripple Outlines First Use Case for XRP and Crypto, Warns US Regulators Could Push Innovation Overseas


Ripple says a lack of clear regulation on crypto assets could trigger an exodus of tech talent away from the US.

In a new piece on blockchain innovation, Ripple’s head of global institutional markets, Breanne Madigan, says the first clear use case for XRP and cryptocurrencies is in the payments industry.

“At Ripple, we see payments as the first obvious use case for digital assets. A key innovation in leveraging a blockchain for payments is that you can move value efficiently—and many subsequent use cases for blockchain technology, including trade finance, smart contracts and lending—all stem directly from the payments innovation.

This is why we are focused on this baseline use case first. With digital assets, for the first time, there’s a way to settle transactions across currencies instantaneously—this helps optimize risk management frameworks, and reduces significant friction pain points including time, trapped capital, and excessive fees. As additional use cases beyond payments develop, more capital will enter the space.”

Madigan says Ripple’s number one focus for XRP is using the digital asset as a bridge between fiat currencies.

The company’s On-Demand Liquidity platform is designed to give banks and financial institutions a fully compliant way to send money across borders, starting with one fiat currency and settling in another, using XRP to facilitate the transaction.

“Ripple’s vision is to collaborate between traditional financial institutions and technology innovators for the explicit use case of cross border payments. Specifically, by leveraging the digital asset XRP as a bridge currency, Ripple facilitates instant fiat-to-fiat payments across borders for partners like MoneyGram.

There is no singular third party or global central bank that keeps track of how cross-border payments move and are settled, so the world has created a complex system of correspondent banking and nostro/vostro accounts that trap an estimated $10 trillion dollars in capital. Using digital assets as a bridge currency can efficiently free up this trapped capital and make the process of sending money cross-border faster, less expensive, and more scalable, by providing liquidity on demand.”

But in order for innovation to happen in the US, Madigan says regulators need to offer more clarity on how crypto assets are regulated.

Without clear guidelines, she says the US could risk losing its edge as a leader in new and emerging technologies.

“Throughout the industry, there is concern that a lack of clear, consistent guidance from the U.S. could lead to a talent flight where innovators and companies will gravitate towards regions with defined regulatory frameworks.

No doubt, as the industry continues to mature, governments and policy makers are feeling the urgency for more regulatory clarity. The U.S. and other pro-innovation countries can set the tone for the rest of the world to follow. And we hope that they will.”

You can check out the full post here.

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