MoneyGram, a Dallas-based financial firm is partnering with Ripple to power its cross-border payments by using XRP instead of fiat currency. The announcement resulted in an immediate 15% surge in Ripple value. MoneyGram shares also rose 6 percent, following the news.
Within minutes after the announcement, Bitcoin was down 6 percent, Ethereum 11 percent while Ripple was down 9 percent. Cryptocurrency market lost $106 billion while the three coins remained down. However, Ripple didn’t stay down for too long.
According to Ripple, MoneyGram will be using its xRapid payment network that will allow faster and cheaper transactions, using XRP.
“xRapid enables real-time foreign exchange (FX) settlement through XRP, which gives financial institutions the ability to unlock liquidity and access multiple corridors with one pre-funded originating account,” said Ripple.
Ripple has constantly been in the headlines due to its dramatic ups and downs. The small and unknown cryptocurrency had grown significantly, becoming the second largest cryptocurrency by market cap for a short period. Major venture firms and banks including Google Venture and Standard Chartered bank have also invested in the startup.
Ripple rose to prominence after it announced a pilot program signed between two major South Korean banks and a group of 71 Japanese banks. Although the South Korean government pushed it down this week, MoneyGram soon helped it rise back.
Reportedly, Seoul is also preparing a bill against cryptocurrency trading across all local exchanges and it is unclear how it will affect Ripple’s pilot project.
The South Korean Justice Minister Park Sank-ki said on Thursday that the country is planning a ban on cryptocurrency trading. The news has shaken the cryptocurrency worlds as South Korea is one of the major cryptocurrency trading markets. Cryptocurrency demand is massive in the country thus, pushing the prices of tokens nearly 30 percent higher than other exchanges in U.S and Europe.
“There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” said Park Sang-ki. He also said that the decision involves several other governmental agencies including the Finance Services Commission and some financial regulators.
The bill does not mean that cryptocurrency trading will be stopped at once. If a bill is drafted, it would require a majority vote of the total 297 members of the National Assembly, a process which could be completed in months or even years.
Abhishek Pitti, founder of Nucleus. Vision, a visual data company using blockchain technology based in Palo Alto and Hyderabad, India said that XRP might escape the ban as the cryptocurrency provides much faster transactions and is used by financial firms.
“Ripple has shown that they can facilitate double-digit million dollars worth of transactions in seconds, at a fraction of the cost of a bitcoin transaction,” he said.
“I don’t think South Korea is banning cryptocurrencies altogether,” he says. “They are clamping down on unregulated exchanges so that shouldn’t affect ripple because their primary users are regulated financial institutions.”
MoneyGram had also made headlines this month after its deal with Ant Financial was canceled by the government of United States. Ant Financial is a unit of Alibaba, the Chinese e-commerce giant. Ant offered to acquire MoneyGram for $1.2 billion but later withdrew its bid after the Committee on Foreign Investment in the United States, or CFIUS, disapproved the deal.
“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago,” MoneyGram CEO Alex Holmes said in a statement.
“Despite our best efforts to work cooperatively with the U.S. government, it has now become clear that CFIUS will not approve this merger. We are disappointed in the termination of this compelling transaction,” he said.
MoneyGram is a popular money transfer service in emerging markets like Brazil and China, where workers from other countries use it to pay bills and send money to homes. Now, with MoneyGram’s partnership with Ripple, customers will send money in the form of XRP.
Also Read: Why Cryptocurrency Market Hard Crashed?