The US-based fintech company Ripple has announced that it will deploy its XRP-based on-demand liquidity (ODL) solution in the Middle East in partnership with a local firm, as the first such roll-out in the region.
The new ODL roll-out will happen in partnership with the Middle East-based blockchain firm Pyypl, and will initially focus on bringing low-cost remittances to the UAE by “using ODL and leveraging XRP,” Ripple said.
Further, the two companies said that Ripple’s ODL solution will reduce “inefficient use of capital” by eliminating the “costly pre-funded accounts” that are normally required for cross-border payments.
“MENA continues to be a critical region for Ripple thanks to our outstanding roster of customers, a welcoming regulatory environment and a regional focus on the needed improvements in the current financial system,” Brooks Entwistle, RippleNet’s managing director for the region, was quoted as saying in the announcement.
According to a report from consulting firm McKinsey, the Middle East is home to two of the three largest remittance corridors in the world, located in the UAE and Saudi Arabia. Combined, the two countries saw USD 78bn in payments in 2020, making up 7% of the two countries’ combined gross domestic product (GDP).
The announcement from Ripple stressed that “XRP will not be held within the UAE,” while also saying that transactions will not involve the national currency AED “as part of the payment flow.”
This week’s announcement from Ripple follows an announcement from July saying that the company is setting up a remittance corridor between Japan and the Philippines.
Despite promising near-instant settlement at low costs, Ripple has in the past struggled with getting its partners to use XRP to source liquidity. Among the partners hesitant to use XRP in the past, major Spanish bank Santander has indicated that the token does not have the required liquidity in enough markets to support their needs.
According to Ripple’s CEO Brad Garlinghouse, however, the issue is not liquidity, but rather uncertainty in the US over whether XRP will be classified as a security or not.
At 15:34 UTC, XRP, ranked 7th by market capitalization, trades at USD 1.02 and is down by 8% in a day and 6% in a week.
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