XRP has been relisted on Coinbase after a favorable outcome in its legal battle with the Securities and Exchange Commission (SEC). This has prompted experts in the field to focus on the possibility of a new collaboration between Ripple, the creator of XRP, and MoneyGram, a major player in global money transfers.
Despite no official update from MoneyGram regarding its association with Ripple, the international remittance firm has revealed its intentions to introduce stablecoin-based remittances in 2022.
With Ripple’s legal victory on July 13th, where a court ruled that XRP was not an illicit security, there is now heightened speculation about the potential revival of the partnership between these two companies.
Ripple and Moneygram Previous Collaboration
In 2018, MoneyGram incorporated Ripple’s technology into its system for cross-border transactions. Subsequently, in 2019, Ripple solidified the partnership with a $50 million investment deal.
Documents submitted to the Securities and Exchange Commission reveal that MoneyGram profited $11.3 million from its alliance with Ripple Labs. As per a statement from MoneyGram, this revenue was recorded over two quarters in the 2019 fiscal year, with $2.4 million in the third quarter and $8.9 million in the fourth quarter.
Related article: Expert Predicts 28,250% Pump to $149 for XRP
However, due to regulatory concerns surrounding XRP after accusations from the SEC, the collaboration between the two companies was dissolved in March 2021.
The recent court decision, which determined that XRP did not qualify as a security, holds significant ramifications for XRP and all parties with a vested concern in Ripple prior to the SEC’s allegations. This includes entities like MoneyGram.
A Complex Connection Linking MoneyGram and XRP
On April 14, 2023, John Deaton, an expert in cryptocurrency regulations, delved into the intricate ties between MoneyGram, XRP, and the SEC in a series of tweets. Significantly, Deaton emphasized the maneuvers of the previous SEC Chairman, Jay Clayton, just before his departure from the position.
As he neared the end of his tenure, Clayton surprisingly ended the case against XRP, leading many to wonder about the reason behind such a decision. Interestingly, this came a day after he had a meeting with the now SEC Chairman, Gary Gensler.
It’s intriguing to note that the SEC let the collaboration thrive for 18 months before Clayton’s exit.
If XRP truly was an unauthorized security as the SEC previously argued, the very existence of this partnership seems to be at odds with the regulator’s position on compliance.
According to crypto law authority John Deaton, the SEC’s explanation for categorizing XRP doesn’t match the essence of the partnership between Ripple and MoneyGram.
Further delving into the past reveals an interesting disclosure. In June 2019, MoneyGram openly engaged with the SEC regarding its association with XRP, and in response, the SEC provided instructions on how to integrate XRP into the company’s financial statements.
2019 Q4 Report Confirms MoneyGram Inquire With SEC About XRP
This creates an intriguing paradox. Despite the SEC’s claim that XRP functions as an investment contract, they provided guidance to MoneyGram on how to categorize XRP transactions as a contra expense.
Throughout the 76-year history of the Howey Test, the inclusion of a contra expense has never been an indicator of security status. Please refer below:
Looking beyond these recent legal developments, it’s worth noting that XRP was featured in a 2019 report from the Financial Stability Oversight Council (FSOC).
Interestingly, the report, endorsed by Jay Clayton himself, listed XRP alongside other prominent cryptocurrencies like BTC, ETH, and LTC. However, the report refrained from labeling XRP as a security or an illicit asset. Instead, it acknowledged the cryptocurrency’s expanding market share.
Related also: Wall Street Expert Predict Double-Digit Rise for XRP Inspired by Microsoft and Apple
XRP Isn’t a Security Says SEC
Highlighting the events leading up to the legal dispute, it’s important to note that months before Ripple encountered legal action, the SEC made a clear statement that XRP was not considered a security. This contradictory position brought the regulatory body’s consistency into question.
Following the recent partial victory against the SEC on July 13 and a surge in exchange listings, attention has turned to MoneyGram’s strategic response. Many in the industry are curious to see if MoneyGram will capitalize on this opportunity, potentially deepening its partnership with XRP due to the newfound regulatory clarity.
Should MoneyGram choose this path, it would enhance its cross-border payment technology. This move comes three years after their collaboration with Visa, a major player in traditional payments, resulted in the introduction of a real-time remittance solution in December 2020.
It’s worth noting that Stellar (XLM), a competitor of XRP, has also taken advantage of these developments. Denelle Dixon, the CEO of the Stellar Development Foundation, recently disclosed the acquisition of a minority stake in MoneyGram International’s parent company, Madison Dearborn Partners.
