Banning Cryptocurrency Would be as Sensible as Banning the Internet

In the early 1990s, the rise of the internet coincided with the fall of communism and the Soviet Empire. It’s not a coincidence that as the internet grew in popularity and usefulness, democracies flourished around the world. The potential of the internet transcended borders and helped to change the world’s geopolitical structure.

However, as internet adoption proliferated, a number of negative uses cases emerged, sparking consumer protection concerns amongst regulators and governments. This isn’t much different from the early days of virtual currency when bitcoin was associated with drugs, guns and Silk Road.

In the case of the internet, officials and activists began calling for a blanket ban, not understanding the key role it would play in building a global community. Luckily, collaboration between countries and the World Wide Web Consortium (W3C) led to the creation of a global framework for electronic commerce in 1997, paving the way for internet adoption and growth.
You can read the rest of this article in The Hill.

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SBI Virtual Currencies to Exclusively List XRP at Launch

 

Adding to the momentum behind XRP’s growing global liquidity, SBI Holdings announced that its newly released digital asset exchange — SBI Virtual Currencies — will use XRP as the only digital asset supported at launch.

SBI Holdings is the leading financial service company in Japan. Their subsidiary, SBI Securities, is Japan’s largest online securities company with more than 4 million brokerage accounts. SBI Virtual Currencies launched in beta on January 30. The exchange is designed to provide a respected and reliable exchange for both its institutional customers and individual digital asset buyers in Japan.
XRP’s strong institutional use case and scalability (1,500 transactions per second) coupled with the growing demand for XRP in Japan, made the digital asset a natural fit for the launch.
In a post last August, SBI Holdings CEO and Executive Chairman Yoshitaka Kitao, told Ripple Insights why SBI Holdings believes so strongly in XRP.

“Not only does it have a clear use case, XRP is faster, cheaper and more scalable than any other digital asset,” Mr. Kitao said. “I strongly believe it will become the global standard in digital currencies.”

SBI Virtual Currencies looks to join xRapid ecosystem
SBI Virtual Currencies (SBI VC) is looking to join the xRapid ecosystem — Ripple’s enterprise-grade solution — to help institutions source liquidity for cross-border payments between Japan and the rest of the world. Ripple will eventually integrate SBI VC’s APIs so that xRapid users — payment providers and banks who are transferring money into and out of Japan — can convert XRP to JPY and JPY to XRP instantly through SBI VC.
The high cost of liquidity inherent to cross-border payments is significantly decreased with xRapid, providing payment providers and banks with an efficient, scalable, and low-cost liquidity option — all while improving their customers’ experience.

Ripple’s senior vice president of business development, Patrick Griffin, believes that the partnership with SBI VC is another step toward reaching the company’s mission of establishing an Internet of Value, where money can move as freely as information.

“Today’s decision to make XRP the primary digital asset of SBI Virtual Currencies shows the utility, efficiency, and scalability respected financial institutions around the world see in XRP. This is a critical step forward in our mission to build XRP liquidity and build an Internet of Value,” said Griffin.

For more information about xRapid or any of Ripple’s solutions, visit Ripple’s Solutions page.

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Q4 2017 XRP Markets Report

To continually improve the health of XRP markets globally, we share regular updates on the state of the market including quarterly sales, commentary on previous-quarter market developments and Ripple company-related announcements.

Quarterly Sales
In Q4 2017, market participants purchased $20.1 million directly from XRP II, LLC¹ — our registered and licensed money service business (MSB). These participants tend to be institutional buyers, and their purchases typically include restrictions that mitigate the risk of market instability due to potential subsequent large sales
Additionally, the company sold $71.5 million worth of XRP programmatically as a small percentage of overall exchange volume. For Q4, these sales represented 0.075 percent (7.5 basis points) of the total $95.4 billion² traded — a decrease from Q3 2017’s 0.20 percent (20 basis points).

Market Commentary: A Quarter for the Ages
XRP markets ended the year with a statement — one that will likely be remembered as a defining milestone in XRP’s history. Though the beginning of the quarter was relatively quiet — with prices trading in a range between $0.20³ and $0.30 — XRP began rallying on December 12 and continued moving upwards throughout the month. It quickly reached and exceeded dollar parity on December 21. From there it climbed higher, briefly touching $2.19 on December 30 before retracing somewhat and finishing the quarter at $1.91. This price appreciation represents an impressive quarter-over-quarter increase of 887 percent and a year-over-year gain of 29,631 percent.

Given the price activity, in some respects, this quarter felt like Q2 2017. While XRP saw large percentage gains in the second quarter, its notional value was the more poignant story in Q4, expanding from approximately $8 billion at the end of Q3 to $191.0 billion⁴ on December 31, making XRP the second most valuable digital asset in the world. In short, XRP markets had a record-setting quarter.

An Eventful Quarter
Early in the quarter, market attention was focused on issues between bitcoin and bitcoin cash and the launch of Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) bitcoin futures. The anticipation for futures was particularly distracting, as markets awaited a pivotal development in the history of the digital asset space. Since XRP has historically been relatively uncorrelated to BTC or any other digital asset, it was not entirely surprising that while the rest of the space found its footing earlier in the quarter, XRP consolidated instead.

In late Q4, XRP markets began to connect the dots once again. Of particular importance were the American Express/Santander partnership announcement, the activation of escrow and the connection of Korean banks to the Japan Bank Consortium. The completion of escrow represented the company’s consistent ability to follow through on a previously announced initiative. Additionally, while neither the AMEX news nor the Korean bank initiative involved XRP, these key developments prove that Ripple is gaining customer momentum. Though it’s early, and today most RippleNet members are adopting xCurrent, each one of these client milestones increases the probability that institutions will eventually use XRP and xRapid to take advantage of more efficient liquidity, just like Cuallix does today. As digital asset markets grow and evolve, newer market participants will continue to look to milestones such as these to gauge XRP’s potential.

Lastly, the fourth quarter was also fascinating with respect to other digital assets. There were some great advancements in the space. Unfortunately, there were also some concerning developments, in particular, the very public bitcoin vs. bitcoin cash civil war and concerns around ether (ETH) and litecoin (LTC) leadership commitment. This may be where XRP most significantly distinguishes itself going forward.

As established corporations consider leveraging distributed ledgers and blockchains, especially public incarnations of those technologies, dispute resolution and commitment will be key. Building pivotal infrastructure on top of technology that does not have clear governance is not palatable for large established companies. Also, from conversations with market participants as well as with possible clients, it’s clear Ripple’s consistent and steadfast support of XRP is a major advantage as the payments industry continues to seriously consider it as an alternative liquidity solution.

Dramatic Volume Increases
Of all the developments in Q4, the dramatic increase in volume likely had the most impact on XRP’s likelihood of becoming an international standard for digital-value transfer. In order for XRP to be highly efficient as a settlement asset for cross-currency transactions, it will continue to need greater volume and depth of order books. These market attributes increase its ability to support much larger cross-border payments and thus increase its utility broadly. Overall, Q4 volumes averaged more than $807.6 million per day, a 35,341 percent increase over Q4 2016’s volumes of $2.28 million per day, with much of the volume growth coming late in the last month of the quarter.

Since December 11, XRP’s volumes averaged $2.77 billion per day as the price rally progressed in earnest. Of particular importance is the growth of strategically important XRP/MXN volumes in Mexico, one leg of the first xRapid corridors. In December, XRP/MXN activity increased by more than 25x its volumes in September, and at times outpaced BTC/MXN volumes. We believe this rise in volumes is partly due to additional market maker activity at Bitso, as well as the rise in speculative interest.

Lastly, XRP also became available across more than 50 exchanges globally — which was likely a driver of growth as well. This increased global reach is the result of Ripple’s continued investment in the XRP ecosystem and will more easily allow financial institutions to source liquidity for international payments through XRP going forward.

 
Korea’s Impact Continues
Though Korean markets continued to be a significant driver of XRP activity during the quarter, growing geographic diversification of XRP liquidity lowered KRW market share to 44.8 percent of total Q4 volume.

 

Interestingly, this retracement of market share didn’t apply to KRW prices. As XRP advanced in Q4, so did Korea’s premium over USD markets. At times, prices were as much as 40 percent higher in Korea than the rest of the world. While it’s still somewhat early to tell, it will be interesting to see if these premiums develop into a leading or lagging indicator of market activity going forward.
Towards the end of December, rumors of a Korean government clamp down on the space began circulating. On December 27, the official news broke. However, much to the market’s surprise, the impact was muted. In fact, many markets — XRP included — continued to rally. However, what seemed like insatiable demand may have some challenges ahead. Given South Korea’s outsized volume share on digital asset exchanges, a more restrictive stance there poses a significant market risk.

What’s on the Horizon for Q1 2018
2018 is likely to be a pivotal year for the broader digital asset markets as a whole, as well as for XRP markets specifically. Q1 will be key to ensuring XRP’s liquidity eventually becomes more like that of existing foreign exchange markets and XRP achieves its goal of becoming the digital standard for international value transfer.

xRapid
On January 11, 2018, we formally announced a partnership with MoneyGram — one of the world’s largest money transfer companies — to use xRapid and XRP for near real-time cross-border payments. In addition, there are a number of other xRapid deals at various stages of completion in the pipeline. We’ll look to make those public as they’re signed and our partners agree to be publicly recognized.

Institutional Hedging and Custody
While customers can use XRP for on-demand liquidity through xRapid, we want to build the necessary markets infrastructure for eventual direct usage of XRP by financial institutions. In Q1, we’ll begin work towards the launch of institutional hedging instruments and custody solutions. Both of these market components are important to institutional adoption and thus are important components of our 2018 roadmap.

¹XRP II, LLC is licensed to engage in Virtual Currency Business Activity by the New York State Department of Financial Services.

²Volume numbers reference xrpcharts.ripple.com volume data.

³Price data references on-exchange Bitstamp XRP/USD closing 24-hour bar prices.

⁴XRP total market cap is calculated using total distributed XRP plus total XRP held by Ripple, including XRP held in escrow, multiplied by the closing Bitstamp XRP/USD price on 12/31/2017.

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American Express Joins RippleNet – Giving Visibility and Speed to Global Commercial Payments

The movement to modernize the global payment system is quickly gaining momentum as another major global financial services company joins RippleNet.
American Express is the latest company to become a member of RippleNet, joining the ranks of Credit Agricole, Airwallex, Cuallix, and more.

American Express is joining Ripple’s blockchain network to provide real-time, business-to-business global payments that will ultimately enhance their customers’ experience.
Initially, American Express FX International Payments (FXIP) will partner with Santander UK to create a transaction channel between the U.S. and U.K. — a first and a boon for the corridor. The U.S. is the U.K.’s largest trading partner, creating an immediate need for frictionless corporate global payments in the U.K. market.

Partnering to deliver faster, better service
By leveraging the power of RippleNet, FXIP customers will see an immediate improvement in how they send money globally.
Compared with the traditional payment process, Ripple’s blockchain-enabled payments simplify connections with intermediaries and provide immediate end-to-end visibility into the transaction status and cost.

What’s more, FXIP’s use of RippleNet will maintain the level of security that American Express customers have come to know and expect.
“We’ve already seen evidence that blockchain technology is playing a transformational role in the way customers are served,” said Greg Keeley, executive vice president of global corporate payments at American Express.
“Not only does this partnership with Ripple help decrease the time it takes for international transactions to be processed, it can make our transactions more effective for our customers,” Keeley added.

Joining forces to avoid settling for less
FXIP’s partnership with Santander UK to send cross-border payments between the U.S and U.K will help American Express not only streamline corporate payments, but also establish a wider footprint in the U.K.
José Luis Calderón, Santander’s global head of transaction banking, said, “This blockchain solution opens up a new channel between the U.S. and the U.K. and presents a significant opportunity for payments globally.

“Collaborating with forward-thinking businesses has enabled us to deliver this cutting-edge, secure, friction-free payment solution and extend our ‘Simple, Personal, Fair’ philosophy to American Express and their customers.”
Ripple CEO Brad Garlinghouse agreed with Calderón’s statement stating, “Ripple is taking a huge step forward with American Express and Santander in solving the problems corporate customers experience with global payments.”

“Transfers that used to take days will be completed in real time, allowing money to move as fast as businesses move today. It’s just the beginning, and we look forward to growing this partnership to help other American Express FXIP customers.
Contact us to learn more about Ripple’s growing network, and how other companies are helping to create one frictionless experience to send money globally.

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Ripple Hosts World’s Central Banks to Explore Next Generation of Payments

Ripple recently gathered over two dozen central banks from around the world to explore how new technologies enable the next generation of payments.
The Central Bank Summit on Blockchain, hosted at Carnegie Hall in New York City, gathered central banks’ senior leadership, payment strategy leads and oversight staff for a focused discussion on blockchain.

Ripple CEO Brad Garlinghouse hosted the event and said, “The Summit provided an opportunity to explore the full payments landscape: central banks’ domestic trials, Ripple’s growing cross-border network and interoperability across systems. Together, these form the beginning of an Internet of Value, where payments move as easily as the data across the internet.”
Internet of Value: enabling connectivity and interoperability

The Summit started with a presentation from the International Monetary Fund (IMF) on fintech’s potential to change market structure, opening new possibilities in payments.
With this context, the Summit explored central banks’ experiments with using blockchain for domestic payments. These domestic trials explored rebuilding existing systems, building new backup systems, and creating new features such as a central bank digital currency.

The research has furthered the understanding of blockchain —  both the use cases for where it makes sense and where it doesn’t. The ultimate adoption of blockchain for domestic payments may not be universal. The optimal solution depends on the pain points and features needed in each market, which can vary greatly by country. With this realization, interoperability between systems —  both centralized and distributed  —  became a key focus area and the impetus of Ripple’s own work on Interledger.

One place where the pain points are universal is in cross-border payments. Cross-border payments — which are fragmented in nature —  are an excellent fit for blockchain technology. What’s more, the technology has been rapidly adopted in the market. Ripple shared how it has specialized blockchain for interbank payments, enabling cross-border functionality that is real-time with transparency into status and fees.
Ripple gave detailed presentations on how we use blockchain-based solutions to enable connectivity in payments. Ripple solutions connect the following:

• Banks with a growing network of over 100 financial institutions
• Payment systems, via a trial with Bank of England to connect RTGS systems
• Networks, through Mojaloop, a platform developed in partnership with The Gates Foundation to connect mobile money providers

Digital assets: The future of liquidity is here
The Summit’s presentations covered the future of seamless connectivity and interoperability, which led to the next critical component for payments: liquidity. To date, liquidity is achieved through pre-funded accounts with counterparties. Yet, that comes with costs and risks that limit reach to high-volume corridors.

The second half of the day explored the technological breakthrough of digital assets and their emerging use cases. For example, one use case that has presented great promise is using digital assets as a liquidity tool — this allows for global reach without pre-funding.
Ripple shared how the adoption of XRP to connect fiat currencies creates a new paradigm for liquidity, enabling greater reach at lower costs than previously possible. The Ripple team discussed our research on adoption models, cost savings, and key takeaways from our trials with banks.
Presentations also discussed other digital currency use cases including central banks’ experiments and the regulatory response to contain risk in ICOs.

Top takeaways for central banks
The key takeaway from the summit was that new technology is modernizing payments. There’s great potential and the Internet of Value is coming into view.
Garlinghouse concluded, “These blockchain conversations have been happening in isolation. The value of the Central Bank Summit was in exploring and connecting these efforts, as together they create the next generation of payments.”
The summit was the first of many forums that Ripple has hosted to connect banks to blockchain and digital asset luminaries, and we will continue to foster the conversation to improve the technology.

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