Ripple cleared a major regulatory hurdle. New York's Department of Financial Services approved the company to sell and custody XRP, its native digital asset on the Ripple Consensus Ledger. The approva
Ripple cleared a major regulatory hurdle. New York's Department of Financial Services approved the company to sell and custody XRP, its native digital asset on the Ripple Consensus Ledger. The approval makes Ripple the fourth digital currency company to obtain a BitLicense in New York.
The company targets institutional investors and banks in New York with XRP, which operates as a bridge asset for moving money across currencies. Banks can use it to execute cross-currency payments while improving access to currency liquidity and cutting the capital costs tied to cross-border transactions.
Ripple published a report in February claiming the combination of its ledger technology and XRP could help banks avoid settlement risk, reduce settlement costs, and preserve up to $23 billion per year. The applications extend beyond moving money between banks. Financial firms could deploy the same cost-cutting advantages in global disbursements, international cash pooling, remittances, and micropayments.
Ripple sees even broader potential. The company wrote: "In the end, the exciting potential of the new technology lies not just in the cost savings banks can extract from the old system but the possibility to enable new models and businesses entirely. It's these new business models that will catalyze development of the Internet of Value."
Several financial services firms have adopted Ripple's infrastructure. CGI Group, Earthport, Expertus, and Santander UK all use the system. In Australia, three of the nation's Big Four banks (Westpac, ANZ, and Commonwealth Bank) are trialing the Ripple protocol for real-time global currency settlements.
Chris Larsen, Ripple's co-founder and CEO, said: "Earning the BitLicense is incredible validation of the institutional use of digital assets by DFS, one of the most influential state regulators. With the BitLicense in hand, we look forward to working with our New York bank customers seeking to use XRP for liquidity and cost savings."
Ripple filed its application in August 2015. The DFS conducted a thorough review covering anti-money laundering standards, the company's capitalization, consumer protection measures, and cybersecurity. Maria T. Vullo, the Acting Superintendent of the DFS, said the agency would "foster the growth of the New York virtual currency marketplace and industry through thoughtful and appropriate regulation."
The DFS has received 26 BitLicense applications to date. Four companies have won approval. The agency rejected two applications: one from Snapcard Inc., a California-based bitcoin merchant solutions provider, and another from OKLink Pte. Ltd., a startup connected to the OKCoin team.
