Ripple Clears Cross-Border Payments Hurdle With EU Approval

Ripple says it has secured an electronic money institution license in Luxembourg.

The cryptocurrency company announced the approval Wednesday (Jan. 14), calling it a “significant step” in its effort to expand its cross-border payment system — dubbed Ripple Payments — in the European Union (EU).

“The EU was amongst the first major jurisdictions to introduce comprehensive digital assets regulation, which provides the certainty financial institutions need to move blockchain from pilots to commercial scale,” Monica Long, Ripple’s president, said in a news release.

“By extending Ripple’s licensing portfolio and evolving our payments solution, we are doing more than just moving money. We are managing the end-to-end flow of value to unlock trillions in dormant capital and moving legacy finance into a digital future.”

The green light from Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF) comes days after Ripple was granted permission to scale Ripple Payments in the U.K., having received approvals for its Ripple’s electronic money institution license and crypto asset registration from the U.K.’s Financial Conduct Authority.

The new permissions join the more than 75 regulatory approvals Ripple has obtained worldwide. This makes it “one of the most licensed crypto companies globally,” the release said, which puts it “in a strong position to support institutional clients with their digital assets needs.”

Ripple Payments processes more than $95 billion in volume, the company said last month, and is licensed in seven other countries: Australia, Brazil, Dubai, Mexico, Singapore, Switzerland and the United States. The company also recently announced plans to expand in Singapore following regulatory approval there.

PYMNTS wrote last year about the importance of stablecoins — cryptocurrencies pegged to assets like the U.S. dollar — in making cross-border payments.

“Traditional cross-border payments are cumbersome,” the report said. “A payment may travel through multiple correspondent banks, each charging fees, performing compliance holds and holding prefunded balances in various jurisdictions. This leads to multiday settlement, foreign exchange slippage, float costs, limited transparency and reconciliation burden.”

Stablecoins on blockchain rails aim to address these frictions head on, PYMNTS added. Due to their peg to fiat currencies, there is less volatility.

“Settlement can become atomic and near instant. Token transfer and transaction metadata move together,” the report continued. “Liquidity can be supplied just in time, so capital isn’t locked across multiple nostro accounts. Programmable rules can embed reconciliation, enforce compliance or trigger conditional transfers.”