Ripple Labs is preparing to go public through an IPO as soon as it winds up the ongoing lawsuit with the Securities and Exchange Commission. The blockchain and crypto company’s CEO Brad Garlinghouse revealed during the recent Consensus 2021 event, that the company has been exploring the idea of an IPO since 2020.
“The likelihood that Ripple is a public company is very high at some point,” stated Garlinghouse.
Interestingly, Ripple has been locked in a heated legal battle with the SEC. The lawsuit accuses the company of rolling out an unregistered security offering through XRP, thus launching a landmark debate as to whether cryptocurrencies should be treated as securities. The legal battle has attracted a lot of attention because it will pave the way for future regulatory rulings regarding cryptocurrencies.
Why the company is interested in going public
Despite its legal standoff, Ripple still believes that going public is one of the best paths for future growth. If the company does go public, it would likely be one of the biggest IPOs to happen in recent times. The company has been marketing Ripplenet as one of the best ways that banks can take advantage of the new opportunities provided by blockchain technology.
The network allows banks to execute highly affordable and real-time cross-border remittance across multiple countries and the system has already been tested in partnership with multiple banks. Unfortunately, the SEC lawsuit puts Ripple in an awkward position that may discourage banks from using its offerings. However, going public means the company will operate under a widely accepted regulatory framework. It could offer more confidence for banks to use Ripple’s services.
Ripple’s IPO might be quite a big deal given that it plans to integrate the traditional banking and remittance industries with blockchain technology which supports the existence of cryptocurrencies. Many view this as a radicle and much-needed development considering that the financial industries have failed to innovate in the last few decades and still operate on slow and expensive systems. The IPO will also allow traditional investors to tap into the huge growth potential offered by blockchain. Banks are fully aware that they need such an innovative way of evolving, otherwise the crypto market will leave them in the dust.
What are the implications of going public on the price of XRP?
An IPO would thus benefit the company considering its main business target is the traditional financial industry. XRP fell from its May highs of more than $1.5 after the recent judicial ruling that allowed the SEC to gather Ripple transaction information from regulators in foreign jurisdictions. The price of the cryptocurrency dropped to a $0.69 but has recovered slightly since then.
XRP traded at $0.91 at the time of this press but the recent news could potentially encourage more confidence in the cryptocurrency. During the Consensus 2021 event, Garlinghouse highlighted some of XRP’s advantages over Bitcoin and Ethereum. XRP’s transactions are faster, cheaper and it does not have a carbon footprint concern like Bitcoin.
The Ripple CEO confirmed that his company still holds a large amount of XRP tokens while the rest is in circulation. He however noted that XRP does not have inflationary concerns because Ripple’s consensus algorithm prevents the creation of new coins.
Will Ripple’s plan to go public appease the regulatory watchdogs?
Ripple’s current legal battle revolves around the question of whether XRP is a security or a currency. So far it remains unclear whether the plans for an IPO might encourage the SEO to back off and withdraw its lawsuit. What we know so far is that a public offer from the company will likely happen as soon as the lawsuit is finalized. Ripple remains optimistic that it is at the tail end of the legal battle.