On Friday, Ripple, the cryptocurrency company, shared news about buying another company called Fortress Trust. This new acquisition gives Ripple a special license in Nevada and lets them do more than just their usual focus on blockchain payments.
They didn’t tell the exact details of the deal between Ripple and Fortress Trust.
Fortress Trust, which started in 2021 by a person named Scott Purcell, helps big companies use digital money. Scott Purcell used to run Prime Trust, a company that takes care of cryptocurrencies, but it stopped when BitGo decided not to buy it anymore.
Ripple is best known for helping money move between different countries. They use a special system that’s kind of like the SWIFT system to make payments between lots of banks and other money companies.
Ripple also has friends in different parts of the world. They work with important companies like Modulr in the UK, Nium in Singapore, and SBI Remit in Japan.
They also use a special kind of money called XRP to help banks and other money places send money across borders. Ripple owns a lot of XRP, and it’s an important part of what they do.
Ripple’s Recent Developments
XRP’s Price Change: The news didn’t significantly affect XRP’s price. It only increased by about 0.4% in the last day, reaching 50 cents in trading.
Ripple’s Challenges: In recent years, Ripple has faced difficulties. They’re dealing with a lawsuit from the U.S. Securities and Exchange Commission (SEC). The lawsuit claims that XRP should be considered a security, and it accuses Ripple’s leaders of conducting an illegal securities sale, worth over $1 billion.
MoneyGram Partnership: Before this legal trouble, Ripple was working with MoneyGram. They used XRP to test instant transfers, making it easier to move money without needing special accounts. However, due to the lawsuit, MoneyGram and Ripple decided to end their partnership in March 2021.
July Milestone: In July, Ripple reached an important milestone. A judge stated that XRP didn’t automatically qualify as a security, which was a positive development for Ripple.
Global Growth: Ripple’s business has been expanding, especially outside of the United States where most of their clients are based. They’ve been gaining momentum internationally.
Potential Return of American Banks: With the favorable ruling in July, there’s hope that U.S. banks might consider using Ripple’s On-Demand Liquidity (ODL) product again. Ripple’s Chief Legal Officer, Stu Alderoty, expressed optimism about this possibility.
Acquisitions: Notably, Fortress Trust is the second company Ripple has acquired this year. In May, they agreed to buy Metaco, a Swiss firm specializing in cryptocurrency custody services, for $250 million.
Deal Size: Ripple didn’t disclose the exact amount they paid for Fortress Trust, but they mentioned it’s less than what they spent on acquiring Metaco. Ripple had previously been a minor investor in Fortress Trust’s initial funding round.
Ripple’s Strategic Acquisition of Fortress Trust
Ripple’s purchase of Fortress Trust is all about making itself stronger. its current business operations, especially when it comes to making payments and handling liquidity. They want to improve the overall experience for their customers in these areas.
Additionally, by acquiring Fortress Trust, Ripple now has access to a Nevada trust, which expands its list of regulatory approvals globally. This allows Ripple to offer regulated services for both traditional money and cryptocurrencies to specific customers in the United States.
Ripple already has a license to operate with virtual currencies in New York, known as a BitLicense. They also hold 30 licenses as money transmitters across the United States and have received preliminary approval as a Major Payment Institution from the Monetary Authority of Singapore, Singapore’s central bank. Additionally, Ripple has expressed its intention to acquire an e-money license from the Irish central bank.
In the long run, Ripple plans to use technology to support new initiatives on their roadmap, allowing them to serve a wider range of customers and meet different needs.
Ripple is part of the “crypto custody” industry, where companies help individuals and businesses securely store their digital assets without requiring extensive technical knowledge.
Fortress Trust uses special programs called application programming interfaces (APIs) that let different software applications work together. These APIs help companies extract data from various software, including wallets holding cryptocurrencies and non-fungible tokens (NFTs).
According to information on Fortress’s website, they work with various types of businesses, including cryptocurrency exchanges, NFT marketplaces, companies involved in tokenization, corporate brands, agencies, securities exchanges, real estate firms, healthcare providers, online banks, celebrities in sports and entertainment, musicians, influencers, and other innovative organizations.
Conclusion
Ripple’s recent acquisition of Fortress Trust signifies its strategy to enhance its capabilities, particularly in payments and liquidity management. This move expands Ripple’s regulatory approvals, including a Nevada license for serving U.S. customers. Despite legal challenges, Ripple’s international growth and potential U.S. bank re-engagement, coupled with recent acquisitions, reflect its determination to evolve and cater to diverse customer needs.
