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Ripple CTO David Schwartz Reveals Unexpected Truths About XRP Distribution and Supply

David Schwartz, Ripple’s Chief Technology Officer, recently shared his views on the company’s strategy regarding its XRP holdings. These revelations provide a better understanding of Ripple’s approach to managing its cryptocurrency holdings.

Ripple’s XRP Allocation

Ripple’s XRP assets are divided into two different categories. The first includes the XRP currently available in Ripple wallets. The second category includes XRP in escrow on the ledger, scheduled for release in the coming months. However, it is important to note that Ripple does not have immediate access to custodial XRP until its scheduled monthly release. In the past, a significant portion of the released XRP was returned to escrow.

XRP Holdings Decisions and Strategies

Responding to a user’s query, Schwartz explained Ripple’s options regarding its XRP holdings. In principle, Ripple can either maintain its current XRP holdings or choose to reduce them. According to Schwartz, the company planned to reduce its XRP holdings as quickly as possible. However, he questions the feasibility and potential benefits of this original strategy.

Initially, the company considered using giveaways to reduce its supply of XRP. But as XRP gained market value, there was a chance that people would take advantage of these freebies, which led to their discontinuation. Ripple has also explored alternative methods, such as B. Locked Sales and using XRP to incentivize affiliates. Ultimately, however, these strategies were similar to selling XRP directly.

Long-term vision and trusting decisions

Schwartz noted that, despite being over a decade old, Ripple is making good progress on its initial five-year plan. He also answered questions from the community about managing deposited XRP. Additionally, Schwartz expressed ambivalence toward the escrow account itself, rejecting the idea of burning the escrow stock on the grounds that it might lead to a different outcome.

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Ripple explains why companies are looking for solutions amid economic uncertainty

Global businesses face significant headwinds as cross-border payment volumes have recovered to pre-pandemic levels while facing the looming challenges of rising interest rates. Amid these complexities, Ripple Labs’ latest insights into the changing economic landscape reveal its cryptocurrency-based payment solutions as a countermeasure.

Main problematic points of the economic scenario

In its recent exploration, Ripple delved into the repercussions of rising interest rates, focusing on its impact on both banks and global businesses. The New Value Report 2023 states that “nearly half of the companies surveyed cited high interest rates as the main challenge for cross-border payments.”

With a diverse global impact, changes in interest rates can put pressure on companies, regardless of their geographic base.

Three crucial points are included for companies in the current economic environment. First, there are currency fluctuations that harm growth. According to Ripple, the intertwined relationship between cross-border payments and local currency conversions cannot be ignored.

The Ripple report emphasizes how interest rate increases could increase the “chances of price instability” and worsen the unpredictability of international transaction costs. They noted the potential for higher losses and stated that “this potential for higher losses may discourage investment activity and economic growth.”

Secondly, fintech highlights the rising cost of credit worldwide and the reduced liquidity situation. A 2022 C2FO survey highlighted in Ripple’s keynote highlighted that a bank’s line of credit or term loan remains the predominant source of working capital for most businesses.

This liquidity supports the efficiency of cross-border transactions. But there is an alarming note of caution: “as interest rates rise, so does the cost of borrowing, resulting in a reduction in overall liquidity in the financial system and higher cross-border transaction expenses.”

Third, Ripple addresses unequal access to financial services. Regional disparities in interest rates can inherently lead to inequalities in access to essential financial services, such as cross-border payments, especially for growing businesses or in developing economies.

Ripple highlighted the pressing challenges faced by companies in regions with high interest rates, which often hinder their ability to engage in international trade or explore markets.

Advantages of Ripple payment solutions

Given the aforementioned challenges, Ripple is pushing the narrative that blockchain can emerge as a quintessential resource for reliable, efficient and globally accessible payments.

Your justification? Deciphering and debunking common crypto myths and harnessing the potential of “blockchain-enabled payments” could allow businesses to offset liquidity impediments created by rising interest rates. This extends to a variety of payments: from global treasury payments to supplier agreements.

Ripple defends its cryptocurrency-based payment solutions by highlighting key features: “With Ripple Payments, customers can access greater working capital with reduced pre-funding requirements, upfront pricing, and no hidden fees.” These solutions promise to settle transactions in seconds, with an almost non-existent failure rate.

Furthermore, the versatility of Ripple’s solutions is manifested not only in reducing costs and increasing efficiency, but also in paving the way for business expansion. A compelling claim made by Ripple is the ability for companies to “leverage a payments network that represents more than 90% of the foreign exchange market,” making it easier for companies to venture into new payments corridors, even those considered challenging.

Given the strong growth of the sharing economy (with projected outlays reaching a staggering $298 billion by 2023 and a freelance workforce of 915 million), micropayments’ importance and geographic reach becomes even more pronounced.

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Ripple applies for UK cryptocurrency license

Ripple has applied for registration as a cryptocurrency company with the UK Financial Conduct Authority (FCA) following its partial victory against the US SEC.

Payment Protocol Ripple recently applied for registration as a cryptocurrency company with the UK’s Financial Conduct Authority (FCA), a company spokesperson tells Cointelegraph. The company is also seeking a payments license in Ireland as part of its major investment in the region.

More cryptocurrency companies are looking to the UK for regulatory clarity and a favorable business environment amid a wave of enforcement actions by the SEC in the US.

Venture capital firm Andreessen Horowitz (A16z) recently announced its first new non-US office in London, following “months of constructive discussions” with policymakers and the FCA, citing a “predictable business environment” as one of the main reasons for expanding abroad.

Several pieces of legislation have been introduced in the British Parliament with the aim of establishing a crypto-regulated environment in the UK. In June, a bill subjecting cryptocurrencies to the same rules applied to traditional assets was enacted after receiving royal assent from King Charles. The new law gives the Treasury, the Financial Conduct Authority (FCA), the Bank of England and the Payment Systems Regulator the authority to introduce and enforce regulations for crypto companies.

In another recent development, upper house lawmakers discussed a bill that seeks to expand authorities’ ability to target cryptocurrencies used for illicit purposes. The bill includes provisions for authorities to have greater flexibility in the confiscation and recovery of crypto assets.

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Coinbase Wallet Stops Support For Ripple (XRP), Bitcoin Cash (BCH)

Coinbase Wallet News: Citing low usage, Coinbase Wallet announced it will no longer support assets like Ripple (XRP) and Bitcoin Cash (BCH) among others. The team announced December 5, 2022 as the deadline to stop support for a total of cryptocurrencies. Users will be able to access their holdings in these assets through the Coinbase Wallet recovery phrase, it said. With this, these networks will lose support to access Dapps on the networks.

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Coinbase Granted Permission For Support On SEC Vs Ripple

Cryptocurrency exchange Coinbase has been granted permission to file its amicus brief to join Ripple Labs in supporting its ongoing lawsuit with the United States Securities and Exchange Commission (SEC).

On Monday, US District Judge Analisa Torres granted motions for the 12 Ripple supporters to submit their amicus briefs. Among the list of growing supporters are Coinbase and the Blockchain Association. Backers have until November 18 to submit their abstracts, but Coinbase has already confirmed their submission. Earlier this month, she asked the court to consider her request for an amicus brief. An amicus brief is known as a “friend of the court” and is a legal brief that contains advice or information related to a court case from an organization that is not directly involved in the case.

The case between Ripple Labs and the SEC took a big step forward in October, when it was decided in Ripple’s favor and Judge Torres ordered the SEC to turn over Hinman’s disputed documents. These documents contain internal SEC emails and drafts from former corporate CFO William Hinman. The documents contain discovery material from a speech given by Hinman in which he claimed that Bitcoin and Ether are not securities. In his speech, Hinman said:

Based on my understanding of the current state of Ether, the Ethereum network and its decentralized structure, the current offers and sales of Ether are not securities transactions.

The documents are more broadly related to the lawsuit against Ripple Labs, its former CEO Chris Larson and its current CEO Brad Garlinghouse. The SEC filed the lawsuit in 2020 alleging that the three entities, Ripple Labs, Garlinghouse, and Larsen, illegally profited from the sale of Ripple’s native XRP token as unregistered securities.

After a week of great uncertainty for the broader cryptocurrency market, XRP was leading in terms of gains and gained more than 10% following developments.