San Francisco-based Ripple acquired Fortress Trust earlier last week to diversify the cross-border payment-focused company. Fortress Trust specializes in financial infrastructure, licensing, and compliance.
Ripple and Fortress are no strangers, though, as Ripple CEO Brad Garlinghouse said: “As an early investor in Fortress Trust, we’ve had a chance to get to know the team, its vision and technology. Since their launch in 2021, they’ve built an impressive business with recurring revenue and a strong roster of crypto-native and new-to-crypto customers.”
Ripple Prepares for Institutional Use of XRP
With the latest acquisition, Ripple and its subsidiaries now hold more than 30 money transmitter licenses as well as NY BitLicense and, as stated by Ripple, an ‘in-principle Major Payment Institution License from the Monetary Authority of Singapore, the country’s Central Bank.’
Joseph Endoso, President of Linqto, a private equity investment platform, said that the long-term impact of this acquisition was huge.
He said: “As more financial institutions adopt RippleNet and utilize ODL, they will need to decide whether to hold XRP temporarily – i.e., only for as long as necessary to clear and settle a cross-border, cross-currency transaction on XRPL – or permanently, because the continual flow of such transactions has reached the scale where constantly buying and selling XRP as a temporary holding creates huge cost overheads (trading fees, fiat to crypto to fiat conversion fees, etc., plus spot market risk associated in that churn).”
Demand for XRP Set to Grow
This will mean banks and other payment providers would move to directly hold XRP out of convenience and from a cost-saving perspective. This is the very reason why Ripple is building out its financial infrastructure: to assist institutions in accessing all of Ripple’s products. Consequently, demand for XRP will increase; as Endoso says, “This will have two positive effects on the XRP price: less volatility (because retail speculative demand gets drowned out by more stable, utility demand from institutions) and institutional demand pressure towards the upside.”
Whether the price of XRP will indeed appreciate remains to be seen and depends on adoption. While Ripple positions itself for this increase in adoption and XRP use, it should be noted that XRP has made some solid gains since its inception. According to CoinMarketCap (CMC), XRP is up 8085.38 percent since it started trading in 2014. CMC further reveals that while XRP traded for $0.005875 back then, its present value is $0.48, still down significantly from its all-time high in 2018 when the price was $3.30.