A recent discussion at the OECD Global Blockchain Policy Forum in Paris is triggering rumors of a partnership between Ripple and Coinbase.
The head of Ripple’s global institutional markets team, Breanne Madigan, joined a panel on regulation in digital finance.
When talking about Ripple’s XRP-powered cross-border payment solution xRapid, Madigan used Coinbase as an example of a company that could use xRapid to move value around the world.
“We signed a deal with MoneyGram to help facilitate their cross-border flows. So there’s an example of, say, someone who lives in the US and wants to send Mexican pesos back to Mexico. So the way it works is, through our partnership, we send MoneyGram’s flow to one of what we call our originating exchanges – say it’s Coinbase in the US, as an example. The US dollars get swapped to XRP there and then they get sent across the border to a local exchange in Mexico, call it Bitso, in this example. Bitso then takes the XRP and swaps it into local Mexican pesos.
And that consumer, or MoneyGram’s end consumer client, will receive Mexican pesos directly. And so we’ve delivered significant cost savings to MoneyGram in that example. Significant efficiency and so that’s a real value proposition to a company that’s affecting the end consumers because their fees will be lowered as a result.”
The comments quickly spread on Twitter, with members of the XRP community wondering if Coinbase is really on board.
Madigan also talked about how Ripple is working to get enough liquidity to launch xRapid in new corridors using additional currencies aside from the US dollar and Mexican peso.
“And so as we scale xRapid, the on-demand liquidity product, what we now need to look at is before we launched MoneyGram we were looking at the current liquidy of XRP versus USD and XRP versus Mexican peso trading on Bitso at that point. And call it half a million dollars a day. Well, if we want to start sending $10 [million] and then getting to $50 [million] and then getting to $100 [million], how are we scaling that liquidity?
And so we’ve been strategically partnering with a number of market makers around how we establish contracts and incentives for people to want to engage so that as we send more volume through these channels there is depth of liquidity in the crosses that we need to support that flow. But the way that we’ve structured these contracts is such that we leave an opportunity for new liquidity participants to have incentive to enter.
And we’re starting to see already, even in the last month since we launched MoneyGram into that corridor, a number of new liquidity participants are realizing there is a real arbitrage opportunity. We don’t have to then pay to incentivize people to make markets because there’s significant volume going to that corridor. And so, this is a first step in developing real deep liquidity markets in areas that never had it before. And we’re transforming the way money is sent across borders as a result.”
As for regulatory issues, Madigan says Ripple is especially concerned about the lack of clarity and the slow pace of cryptocurrency regulation in the US.
“Certainly there are hurdles and we’re in the early stages. But that’s one way that we’re practically dealing with the challenges at Ripple. On the regulatory side, I think the importance is really establishing really clear frameworks that are principles-based rather than rules-based because we are at such a nascent stage of this industry’s development that we need to allow for flexibility and allow companies to be nimble but still adhering.
I think there’s concerns in the US with some of the approaches to date that we’re sort of missing out. There’s been other jurisdictions – Switzerland, Singapore and others – that have established more clear frameworks. And we are at a risk in the US, which is where our company is headquartered, of flight of talent if we can’t get to some consensus.”