Ripple
has
declared
the
death
of
(XRP).
Well,
to
be
fair,
to
be
accurate,
Ripple
CEO
Brad
Garlinghouse
has
said
the
exact
opposite
when
announcing
the
Silicon
Valley
crypto
mainstay
would
launch
a
U.S.
dollar-pegged
stablecoin
later
this
year.
But
in
the
grand
scheme
of
things,
XRP’s
usefulness
is
dwindling.
(Sorry,
XRP
Army,
it’s
my
job
to
speak
it
how
it
is.)
This
is
an
excerpt
from
The
Node
newsletter,
a
daily
roundup
of
the
most
pivotal
crypto
news
on
CoinDesk
and
beyond.
You
can
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to
get
the
full
newsletter
here.
The
Ripple
stablecoin,
expected
later
this
year,
will
apparently
be
backed
1-to-1
by
cash
equivalents
including
U.S.
dollar
deposits,
U.S.
government
bonds
and
other
low-risk
investments,
according
to
the
company’s
announcement.
The
idea
is
reportedly
to
create
a
more
trustworthy
alternative
to
assets
like
Tether’s
(USDT)
and
Circle’s
(USDC).
Indeed,
as
many
others
have
pointed
out,
the
$150
billion
stablecoin
market
is
crowded
—
but
it’s
also
highly
lucrative.
Tether,
the
first
and
largest
stablecoin
that
currently
dominates
the
market,
is
essentially
being
used
as
a
cash
cow
to
fund
Tether
CEO
Paolo
Ardoino’s
many
wild
ambitions
(from
AI
to
decentralized
messaging).
It’s
possible,
facing
as
much
as
a
$2
billion
fine
from
the
U.S.
Securities
and
Exchange
Commission
(SEC),
Ripple
is
looking
for
a
new,
proven
revenue
source.
Garlinghouse
is
apparently
unfazed
by
the
crowded
competition,
telling
CNBC:
in
the
future
the
stablecoin
“market
will
look
different,
certainly
based
on
size.”
In
many
ways
Ripple’s
existing
business
model
—
selling
financial
services
based
around
its
XRP
Ledger
as
well
as
On
Demand
Liquidity
and
RippleNet
protocols
—
is
falling
short.
Although
Ripple
has
seen
some
success
forming
partnerships,
it
seems
increasingly
clear
legitimate
financial
institutions
do
not
want
to
take
on
the
volatile
currency
risks
of
working
with
unpegged
digit
assets.
Over
Ripple’s
decade-plus
history,
it
often
seemed
better
at
building
community
(the
XRP
Army)
and
being
a
crypto
cause
(taking
the
SEC
to
court
over
the
crucial
question
of
whether
tokens
are
securities).
It’s
been
less
successful
at
building
products
companies
and
individuals
actually
want
to
use.
“Nobody
is
using
XRP
itself
as
the
method
of
payment,
just
like
nobody
is
really
using
BTC
much
for
that,”
Columbia
Business
Professor
and
former
Paxos
stablecoin
fund
manager
Austen
Campbell
said
in
a
direct
message.
Of
course,
that
isn’t
totally
true.
Diameter
Pay
CEO
David
Lighton
said
he
partnered
with
Ripple
on
an
early
pilot
experiment
of
xRapid
(rebranded
as
Ripple
ODL)
to
send
remittances
between
the
U.S.
and
the
Philippines.
While
he
no
longer
uses
that
particular
service,
he
does
use
the
RippleNet
messaging
platform
for
some
cross-bank
transactions,
which
doesn’t
rely
on
XRP.
“Ripple
has
sort
of
a
best
in
class
data
structure,
most
of
the
banks
are
kind
of
behind,”
Lighton
said.
“It’s
a
good
product,
but
they
don’t
really
sell
it
that
much
anymore.
I
think
that
they’re
sort
of
keeping
it
alive
for
their
legacy
clients
—
it’s
not
entirely
clear
to
me
why
that
is.”
Lighton
said
he
stopped
using
ODL
when
he
left
the
consumer
remittance
business,
but
found
it
also
to
be
a
useful
product.
It
helped
him
manage
currency
risk
by
providing
real
time
settlements
for
small
tokenized
trades.
“It’s
not
entirely
clear
how
all
of
that
has
been
put
together,
because
I’m
not
currently
using
it.
But
it’s
reasonable
to
say
there’s
some
value
added
because
it
helps
firms
reduce
their
cost
of
working
capital,”
he
said.
See
also:
In
Their
Own
Words:
Real
Companies
Talk
Ripple
XRP
Pilots
(2018)
However,
many
of
Ripple’s
higher
profile
partnerships
have
fallen
through.
Santander,
one
of
the
largest
banks
in
the
E.U.,
put
Ripple
on
ice
after
the
bank
realized
using
XRP
wouldn’t
work
for
its
customers’
needs.
A
storied
relationship
with
MoneyGram
ended
due
to
the
increasing
costs
associated
with
cross-border
XRP
payments,
and
the
need
for
MoneyGram
to
form
third
party
relationships
with
crypto
exchanges
in
dispersed
regions.
MoneyGram
terminated
the
deal
with
Ripple,
which
invested
$30
million
in
the
remittance
giant
in
2019
to
use
RippleNet,
after
a
class-action
lawsuit
was
filed
by
shareholders
alleging
MoneyGram
should
have
been
aware
that
XRP
could
have
been
deemed
a
security
and
thus
impact
MoneyGram’s
bottom
line.
The
question
of
whether
XRP
is
a
security
won’t
really
be
answered
until
Ripple’s
four
year
legal
battle
with
the
SEC
ends
after
appeals.
Right
now
it’s
a
complicated
situation.
Judge
Analisa
Torres
found
last
year
that
XRP
is
NOT
a
security
by
default
(specifically
when
traded
on
exchanges),
but
it
does
represent
an
investment
contract
when
Ripple
sells
the
token
to
qualified
investors.
And
that’s
the
rub.
For
years,
Ripple
has
essentially
funded
itself
by
selling
quarterly
tranches
of
XRP
for
hundreds
of
millions
of
dollars
to
investors.
The
SEC
alleged
that
Ripple
and
two
of
its
executives
raised
over
$1.3
billion
from
the
sale
of
XRP
through
unregistered
securities
offerings,
about
$770
million
of
which
in
institutional
sales
was
found
to
violate
Section
5
of
the
Securities
Act.
It’s
unlikely,
no
matter
the
appeals
process,
that
that
activity
will
be
able
to
continue
on
the
same
scale.
It’s
hard
to
get
a
sense
of
Ripple’s
financials
as
a
private
company.
But,
in
many
quarters
leading
up
to
the
SEC’s
suit,
these
programmatic
sales
represented
a
decent
chunk
of
non-bot
XRP
trading
activity.
Ripple
has
claimed
in
the
past
it
has
had
over
200
clients
for
RippleNet
from
central
banks
and
financial
institutions
across
over
40
countries.
But
often,
beyond
the
initial
announcement
that
companies
will
be
using
XRP
for
cross
border
liquidity,
there
is
very
little
indication
how
often
Ripple’s
financial
services
are
actually
used.
Often
times
the
pilots
are
just
internal,
and
not
used
for
consumer-facing
applications.
Bank
Dhofar,
Omar’s
second
largest
bank,
for
instance,
announced
it
would
use
RippleNet
in
2021
and
offers
customers
the
option
to
“Deposit
up
to
OMR
1,000
to
deposit
accounts
in
India
instantly
through
Ripple.”
But
that
is
the
only
mention
on
the
bank’s
website.
Many
others
—
including
payments
apps
and
remittances
services
—
make
no
mention
of
Ripple
at
all
on
their
corporate
sites.
Lighton
said
he’d
consider
using
ODL
again
if
it
was
“a
good
enough
commercial
proposition”
and
that
if
he
could
“get
comfortable
with
the
regulatory
and
compliance
risks,”
but
when
it
comes
to
financial
services
there’s
a
lot
of
up-
and
downstream
relationships
that
do
internal
risk
ratings
to
figure
out
whether
to
work
with
you
that
aren’t
yet
comfortable
with
crypto.
“It’s
really
a
tough
environment
right
now
to
do
something
cool
and
sexy,”
he
said.
“I’m
a
regulated
entity.
My
top
loyalty
is
to
our
anti-money
laundering
obligations.”
Asked
whether
he’d
be
more
comfortable
using
stablecoins
or
stablecoin-based
services,
Lighton
said
he’s
even
more
hands
off
there
following
the
Federal
Reserve’s
Novel
Activities
Supervision
Program
instituted
last
summer,
which
dialed
up
the
heat
on
entities
using
stablecoins.
“There’s
some
brilliant
ideas
behind
stablecoins.
The
problem
is
no
one
is
really
sure
how
to
regulate
them,”
Lighton
said.
He
mentioned
that
PayPal
is
allowed
remittances
through
its
PUSD
stablecoin
on
its
Western
Union-like
platform
Xoom,
which
might
be
an
avenue
that
Ripple
goes
down.
To
be
fair,
Ripple’s
XRP-based
financial
tools
are
largely
meant
to
work
in
the
background
—
though
many
would
still
likely
prefer
financial
rails
built
on
fiat
rather
than
a
free
floating
currency.
That
may
be
why
a
growing
number
of
crypto
companies
and
projects
decide
to
go
down
the
stablecoin
route.
In
fact,
Ripple’s
soon-to-be
competitor,
Circle,
issuer
of
the
second
largest
stablecoin,
went
through
a
number
of
corporate
reevaluations
—
going
from
a
peer-to-peer
payments
platform
to
a
bitcoin
wallet
—
before
it
landed
on
the
stablecoin
business.
Maybe
that
is
the
natural
crypto
lifecycle.
