Ripple to launch crypto service for financial companies amid legal battle with the SEC

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  • Ripple is set to launch a product called Liquidity Hub that allows financial services firms to provide their customers with access to cryptocurrencies.
  • Customers will be able to offer trading in a selection of cryptocurrencies including Bitcoin, Ethereum, Litecoin, Ethereum Classic, Bitcoin Cash and XRP.
  • Ripple is in hot water with the US Securities and Exchange Commission over XRP, a cryptocurrency with which it is closely linked.

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Fintech start-up Ripple said on Tuesday that it is launching a new product that gives financial services companies the ability to give their customers the ability to buy and sell cryptocurrencies.

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The San Francisco-based company said the facility, called Liquidity Hub, will give its enterprise clients access to digital assets from multiple sources, including market makers, exchanges and over-the-counter trading desks.

Customers will be able to offer trading in a selection of cryptocurrencies including Bitcoin, Ethereum, Litecoin, Ethereum Classic, Bitcoin Cash and XRP, Ripple said. The company also expects to offer other digital assets like NFTs, or non-fungible tokens, in the future. The feature is currently in a preview stage, but is set to launch in 2022, Ripple said.

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Founded in 2012, Ripple is closely associated with the cryptocurrency XRP. The company markets XRP as a “bridge” of sorts for financial firms to accelerate international payments with its on-demand liquidity product.

With nearly $60 billion worth of tokens in circulation, XRP is the seventh-largest digital currency globally, according to data from CoinMarketCap.

Ripple also sells a platform called RippleNet, a financial messaging service used by banks and other financial institutions to send money across borders. Ripple positions its offering as a competitor to the global interbank payments network, SWIFT.

Ripple is in hot water with the US Securities and Exchange Commission over XRP. The regulator is suing the company and executives Brad Garlinghouse and Chris Larson for allegedly raising more than $1.3 billion through an unregistered securities offering. Ripple is fighting the lawsuit, arguing that XRP should not be considered a security.

The company is jumping into a new product category at a time when interest in cryptocurrencies has increased dramatically. Bitcoin and Ether – the first and second largest cryptocurrencies respectively – both hit record highs this week amid a broad rally in the cryptocurrency market.

With digital assets such as Mastercard, PayPal and Goldman Sachs now providing support for digital assets, crypto is increasingly being adopted among mainstream companies as well.

RippleNet general manager Ashish Birla said the company’s new tool “can be thought of as an aggregator for various liquidity locations and individual assets, the same way Google Flights is for airlines and flights.”

The product is about two years in the making, Birla said. Ripple said its first customer to use the service is Coinme, a bitcoin exchange and ATM operator based in the US.

“We have a long history of working with financial institutions, crypto exchanges, brokerages and market makers that our enterprise clients can now directly benefit from,” Birla told Businesshala. “We plan to support a wide variety of assets and plan to expand to more tokenized assets such as NFTs in the future.”

Ripple said it would offer credit via XRP to its financial partners to avoid them having to pre-fund accounts for Liquidity Hub.

“Companies doing this today will have to park working capital in an exchange while waiting for funds from weekend activities to be credited to their bank accounts,” Birla said. “We started offering this as part of ODL and it is one of our most sought after features.”

Last privately valued at $10 billion, Ripple is one of the largest crypto start-ups in the world. It counts the likes of venture capital firm Andreessen Horowitz, Japanese financial services company SBI Holdings and Spanish bank Santander as investors.

However, US regulatory uncertainty has been a major headwind for the company. Nevertheless, Ripple says it is seeing increased traction in other markets such as Japan and the UK, with international volumes in its ODL crypto product growing 25x since the third quarter of 2020.

“Despite the odds with the SEC in the US, our engagement with clients globally has not slowed down,” Birla said.

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