Ripple officially debuted its XRapid payment system this past week at the company’s Swell event in San Francisco. The payment system enables cheap, efficient international money transfers through the use of the XRP digital currency.
XRapid has been making headlines for months and a number of financial institutions have been testing the payment protocol. On Monday, however, Ripple officially showcased the technology to the world.
At the same time, Ripple also announced that three financial institutions were already using XRapid for commercial purposes. This is the first time XRapid has been used in commercial transactions.
XRP, which is used to facilitate transfers within the XRapid protocol, has surged nearly 25% this past week, briefly surpassing ETH as the world’s second largest cryptocurrency by market cap at multiple points.
XRP isn’t just surging because of the hype: XRP plays a central role in the XRapid payment protocol. XRapid transfers fiat currencies from one country to another using the XRP digital currency as a medium of transfer. If someone wants to trade $1 million worth of fiat currency, then $1 million of XRP needs to be purchased to facilitate that transfer.
One of the banks already using XRapid’s protocol is using the protocol to facilitate cheap transfers from the Mexican Peso to the United States Dollar, significantly reducing the cost and time of existing remittance solutions.
The big announcement attracted the attention of mainstream financial media outlets like Fortune, which had the following to say:
“Alistair Constance, CEO of MercuryFX [one of the three financial institutions using XRapid commercially), told Fortune that he was persuaded to join XRapid’s earliest set of customers after running two trials of the product over the past couple of years. The pilots involved sending a several thousand dollars in small denominations to a charity in Mexico.”
The Legal Status Of XRP Continues To Be Uncertain
Despite the good news for Ripple and XRP, the legal status of XRP hangs in limbo. While most agree that bitcoin does not qualify as a security, there’s less certainty about the world’s second and third largest cryptocurrencies: ETH and XRP.
The SEC has previously indicated that ETH does not qualify as a security under United States securities laws, although there are some concerns that the Ethereum Foundation’s ICO back in 2014 may have been illegal.
The SEC has not been so forthcoming about Ripple and XRP. Ripple insists that XRP is a totally decentralized cryptocurrency with limited connection to Ripple. Ripple is a private company and XRP is a decentralized digital currency.
However, Ripple continues to be the largest token holder in the XRP community, and they generate revenue by selling XRP tokens they pre-mined at the launch of the network. As the value of Ripple (the company) rises, the value of XRP is also expected to increase.
Despite the uncertain legal status of XRP, the future looks bright for Ripple’s XRapid technology as Ripple seeks to attract new financial institutions across the world. Stay tuned for more news as Ripple’s Swell conference continues to get underway throughout the week.