Anyone who has or is considering investing online in cryptocurrencies will have most likely been more than a little concerned over steep price drops since the beginning of the year. Bitcoin futures beginning to trade on major US regulated exchanges CME and Cboe led to a sharp upward surge in the prices of most major cryptocurrencies late last year. The move was interpreted as marking cryptocurrencies making a significant step towards mainstream adoption and integration into financial markets.
However, strict moves by several Asian countries early this year to limit cryptocurrencies have had the opposite effect. China shutting down cryptocurrency exchanges on its territory and South Korea considering a bill to do the same was followed by the Indian government declaring it would not consider payments made with cryptocurrencies legal. This regulatory crackdown nullified much of the positive sentiment of early last year and has seen cryptocurrency prices largely drop back to where they were in November.
The blockades being put up by different regulators have done much to undermine sentiment around how quickly cryptocurrencies might be expected to mainstream, if at all. However, the last week has seen some new positive developments in favour of cryptocurrencies.
Firstly, a hearing in the US Senate last week between regulators and lawmakers discussing the need for regulation around cryptocurrencies was interpreted positively by proponents of the digital fiat alternatives. Reading between the lines, market observers felt the surprisingly informed debate demonstrated tacit acknowledgement that cryptocurrencies aren’t going anywhere. It seemed the participants felt the required approach moving forward was for a regulatory and legal framework that was appropriate must be found and not a draconian attempt to ban cryptocurrencies.
This week another major announcement that will instil optimism, especially among investors of Ripple, the cryptocurrency with the third largest market capitalisation. The UAE Exchange, one of the largest in the Middle East and owned by Travelex founder and billionaire Bavaguthu Shetty, has announced that it has moved its international payments system onto the Ripple Blockchain. Ripple’s Blockchain is a clearance and settlement system that many believe is a more efficient alternative to the current SWIFT system. International payments made over the RippleNet network are both much faster and cheaper than is the case using SWIFT and several banks have conducted recent experiments with it. However, the UAE is the first major finance company to officially adopt Ripple as its main cross-border payments system.
The exchange is said to currently hold a 6.75% market share of the $575 billion global remittance market, with hopes that will be increased to 10% by 2020. Ripple’s XRP cryptocurrency is not, unlike Bitcoin, intended to be used as a fiat money alternative. Rather it is used only within the Ripple ecosystem to pay for its use. Ripple’s Blockchain can be used for the verification and recording of transactions involving all kinds of assets, not only cash.
The UAE Exchange’s CEO commented:
“The early adoption of this game-changing technology allows us to offer a competitive service, as it will have an impact on the speed and cost of cross-border transactions. We are proud to deliver the future of payments with Ripple.”
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