After the conclusion of the Ripple vs. SEC lawsuit, the debate on XRP usage heats up! Ripple’s Chief Technology Officer, David Schwartz, has clarified the company’s ability to use XRP for its payment services following the SEC’s recent injunction. This comes in response to concerns about whether Ripple can continue using XRP for On-Demand Liquidity (ODL) transactions in the U.S.
SEC Ruling and Its Implications
In the wake of a $125 million fine imposed on Ripple for securities violations, Judge Analisa Torres issued an injunction prohibiting Ripple from further institutional XRP sales. This ruling has created confusion regarding the future of Ripple’s ODL services, particularly in the U.S., where critics like “Scam Detective” argue that the injunction could extend to Ripple’s use of XRP for these transactions.
Schwartz’s Clarification
Moreover, David Schwartz addressed these concerns by distinguishing between “using” XRP and “selling” XRP. He emphasized that while Ripple might not be actively using XRP for ODL transactions with U.S. partners at the moment, the injunction does not necessarily prevent the company from doing so in the future. Schwartz’s comments suggest that the injunction’s impact is more focused on sales rather than usage.
Bill Morgan agrees that while XRP sales before the lawsuit are accounted for, future ODL transactions in the U.S. face uncertainty without a registration exemption. He notes that Ripple currently does not use XRP in U.S. corridors, and this likely will continue, which could reduce demand for XRP.
Ripple’s Payment Flow
To further clarify, Schwartz referred to the document details how Ripple handles payments: after the sender inputs payment information, Ripple validates and approves the transaction. Following Ripple’s approval, a payout partner ensures compliance before finalizing the transaction. XRP is then moved and converted to the destination currency.
Industry Insights
Schwartz’s remarks align with insights from industry experts, including CapSign founder Matt Rosendin and attorney Jeremy Hogan, who have also suggested that Ripple can continue leveraging XRP for payments despite the SEC’s injunction.
One of the crypto analysts, Mr. Bojangles, gave a more detailed outlook, saying that Ripple can very much continue using XRP for On-Demand Liquidity (ODL) in the U.S., provided it follows SEC regulations.
This involves either registering XRP sales with the SEC or using exemptions like Regulation D for private placements, Regulation S for international transactions, or Rule 144A for sales to qualified institutional buyers.
Ripple must implement strong KYC and AML practices, automate compliance with smart contracts, and keep detailed records. These steps ensure that Ripple can maintain the efficiency and benefits of ODL—such as fast settlements and lower costs—while adhering to legal requirements.
Overall, Schwartz’s explanation and industry outlook clearly indicate that Ripple may still utilize XRP for its payment services, even as it navigates the ongoing legal constraints imposed by the SEC.
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