Ripple’s win in court could lead U.S. banks to look into using XRP for payments across borders

In a groundbreaking decision, United States District Judge Analisa Torres of the Southern District of New York ruled that XRP was not necessarily a security, siding with the Fintech firm Ripple.

The cryptocurrency’s creators, Ripple, are counting on XRP adoption by U.S. financial institutions. In an interview with CNBC, Stuart Alderoty, Ripple’s Chief Legal Officer, said that the firm plans to approach financial institutions in the United States about adopting its On-Demand Liquidity (ODL) product. The San Francisco company claims that the use of XRP makes it possible for ODL to provide international money transfers in near real-time.

In December 2020, Ripple and its top executives CEO Brad Garlinghouse and Executive Chair Chris Larsen were sued by the U.S. Securities and Exchange Commission (SEC) for allegedly illegally selling $1.3 billion worth of XRP. In a recent ruling, a court in New York found that XRP was not a security in the traditional sense, dismissing multiple SEC claims against Ripple.

Stuart Alderoty, Ripple’s CEO, expressed hope that the ruling would encourage U.S. banks to return to the company and begin using its ODL product: “I think we’re hopeful that this decision would give financial institution customers or potential customers comfort to at least come in and start having the conversation about what problems they are experiencing in their business, real-world problems in terms of moving value across borders without incurring obscene fees.”

To facilitate instantaneous liquidity sourcing and real-time capital transfers, Ripple employs ODL, which makes use of XRP as an intermediate currency. Organisations use ODL to move money from their internal treasury to overseas accounts, and it is used by payment processors, fintech doing business-to-business transactions, and others.

Although both Ripple and the SEC claim victory, Judge Torres’ judgement was divided, with the judge agreeing that XRP itself was not a security but disagreeing on other points. She also admitted that certain token sales might be considered securities transactions when dealing with institutional investors.

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