How important are U.S. remittance markets to Ripple? – Analyst Cochran

  • Because of the importance of the U.S. to the global remittance market, the SEC’s action against Ripple could have far-reaching consequences, according to Adam Cochran.
  • The probability for a delisting of XRP on the US exchange Kraken is high.

After Adam Cochran, partner at Cinneamhain Ventures and professional analyst, provided an update on the delisting of XRP on Coinbase two days ago, he now elicited the potential impact for Ripple from the SEC lawsuit. Specifically, Cochran examined the question of what would happen if Ripple loses the lawsuit and is no longer allowed to use XRP for the U.S. market.

In this regard, the analyst noted that there are “a lot of pro-XRP voices” who say it would be “no big deal” if Ripple were cut off from U.S. markets. Cochran, however, doubts this, stating:

The US is 33% of global outbound remittance, and 70% of counterparty settlement agents are US companies.

In other words, it’s almost impossible to have a remittance market without the US & then you still need to compete with TransferWise, WorldRemit (Stripe), Coins.ph, Abra, Stellar, Dwolla & Zhongguo for the remaining market while at a counterparty disadvantage.

As Cochran went on to explain, remittance markets work in the way that companies make money by arbitraging between the two currencies. Because of this, providers need the best liquidity for the settlement bid, which Cochran said is mostly done by U.S. merchant banks.

“If US companies can’t deal with you, your bids get worse & you’re more expensive than competitors,” Cochran said. Furthermore, the expert pointed out that XRP was also supposed to be established as a transfer medium between banks. A victory for the SEC could have an impact on this use case as well:

Outside of remittance $XRP was supposed to also do bank settlement. But JP Morgan’s private JPMorgan coin is US compliant and has 300 banks on boarded pushing Ripple back into the settlement market which needs the us.

Kraken’s decision on XRP is still pending

In addition to Coinbase, the decision to delist XRP for U.S. customers on Kraken is also still pending. The San Francisco-based exchange beats international exchanges Binance and Huobi by XRP trading volume and ranks second in the United States. With Kraken placing a high emphasis on compliance, this market for XRP could also disappear.

Given their U.S. MSB licenses and SPDI charter banking status in Wyoming, it seems unlikely that they will take the risk of continuing to broker XRP in the U.S., according to the analyst. In fact, Kraken has considered going so far as to register as an Alternative Trading System (ATS) in the past, which would place the company under SEC oversight. Moreover, Kraken already bans US users from New York and Washington from trading. Therefore, the probability of a listing seems quite high.

About Author

Jake Simmons has been a crypto enthusiast since 2016, and since hearing about Bitcoin and blockchain technology, he's been involved with the subject every day. Beyond cryptocurrencies, Jake studied computer science and worked for 2 years for a startup in the blockchain sector. At CNF he is responsible for technical issues. His goal is to make the world aware of cryptocurrencies in a simple and understandable way.

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