A Legal Analysis: Can XRP Be Considered a Bridge Currency?

Ripple, a company focused on revolutionizing cross-border payments, has introduced tools to attract global investors to the world of cryptocurrency. This move aims to address longstanding issues in cross-border transactions and improve efficiency. Notably, attorney and crypto enthusiast Bill Morgan has emphasized that institutions utilizing Ripple’s digital asset XRP for cross-border transactions (known as ODL) are not treating it as a means of investment for profit, but rather for practical purposes. The controversy surrounding Ripple stems from its disagreement with considering these XRP sales as investment contracts.

A recent Twitter exchange shed light on the concerns regarding XRP. A user expressed skepticism, suggesting that XRP is not suitable as a bridge currency and may be perceived more as a security than an actual currency. The user also pointed out that back in 2014, Jed McCaleb, a key figure in the crypto industry, anticipated these concerns and chose to focus on XLM instead of XRP.

In response to these doubts, Bill Morgan questioned whether it was truly excessive to consider XRP as a bridge currency. He reminded the user that Judge Torres had no difficulty in recognizing XRP’s attributes as both a currency and a commodity, leading to the inference that it could be sold as an investment contract. This acknowledgment reflects the uniqueness of XRP as an asset.

Furthermore, Ripple’s Chief Technology Officer (CTO), David Schwartz, recently confirmed the compatibility of their Central Bank Digital Currency (CBDC) Platform with the XRP Ledger and XRP tokens. He highlighted that both platforms share a common core technology and can seamlessly interact with each other.

Schwartz emphasized that the CBDC Platform has the capability to utilize XRP as a bridge currency for cross-currency and cross-border payments. However, he made it clear that he does not recommend building products that compel individuals to use XRP, unless they are specific features of the XRP Ledger. This approach ensures that users have freedom of choice and are not deterred from using the product.

Ripple’s continuous efforts to enhance cross-border payments are gaining traction, as the company explores innovative solutions and addresses concerns related to XRP. With endorsements from industry experts and ongoing developments, Ripple aims to solidify its position as a frontrunner in the cryptocurrency world.