Ripple Labs, Inc., the company behind the XRP cryptocurrency, is reportedly planning to target the Chinese market in order to further expand its operations and services.
Jeremy Light, Ripple’s VP of EU Strategic Accounts, recently told CNBC:
“China is definitely of interest, it is definitely a target. China is definitely a country and region of interest.”
Cross-Border Payments With Ripple
Notably, Ripple appears to have already started its expansion efforts in the East Asian region through its partnership with Hong Kong-based financial services company LianLian International. Both parties came to an agreement, in February 2018, which entails facilitating faster and more cost-effective cross-border payments between Hong Kong and mainland China by using Ripple’s suite of financial products.
Ripple’s partnership with LianLian will also involve using the XRP cryptocurrency to process international payments from Hong Kong to Europe and the United States. However, there are currently no official reports of Ripple’s products being used by LianLian.
The main difference between Ripple’s XRP and most other major cryptocurrencies is that XRP-based transactions are validated by centralized entities such as traditional financial institutions and retail companies, instead of individuals. Moreover, XRP is “pre-mined”, which means that unlike bitcoin and many other cryptos, its maximum supply was already created when it was first launched and it does not rely on the energy intensive process of mining.
Restrictive Regulatory Environment
If Ripple is looking to enter the Chinese market, the company may not be able to do so with its XRP cryptocurrency because local authorities have resrtrcited crypto trading. As reported by CryptoGlobe, Chinese Yuan (CNY) to Bitcoin (BTC) trading now accounts for less than 1% percent of the global crypto trading volume due to a major crackdown on cryptocurrencies in China.
Moreover, toward the end of 2017, when cryptocurrency prices skyrocketed, China’s regulators began to increasingly scrutinize crypto-related projects due to the rise of numerous scams and fraudulent schemes associated with them. In fact, initial coin offerings (ICOs) were banned by China last year.
Partnerships With Over 100 Financial Organizations
Despite the restrictive business environment for cryptos, Ripple appears to be moving forward with its business strategy, which involves penetrating the Chinese market. Currently there are reportedly over 100 financial organizations working closely with Ripple, inclduing UBS, Spain’s Banco Santander, Standard Chartered, and UniCredit.
However, there is currently only one Chinese client partnered with Ripple, and it might take a long time before Ripple’s financial products are adopted by China’s banks and businesses. Notably, the potential market for fintech is huge in China, considering that innovative payment apps like Ant Financial’s Alipay and Tencent’s WeChat Pay are widely used throughout the country.
While Ripple is still in its early stages of exploring China’s financial sector, it has launched an app known as Money Tap in Japan through a collaborative partnership with 61 local lending companies. Japanese lenders will reportedly be testing Ripple’s xCurrent product to make “instant” cross-border payments.
Not Interested In XRP
Despite the growth in adoption of Ripple’s financial products, many of its partnership projects are still in their pilot or experimental stages. Most traditional financial institutions don’t really seem interested in using its XRP cryptocurrency.
However, large multinational money transfer companies like MoneyGram and Western Union are testing Ripple’s xRapid technology, which utilizes XRP, to process transactions. Interestingly, Western Union’s executive team has criticized Ripple’s token for not being effective or efficient in making payments, and the company’s recent crypto-related patent application did not mention XRP or anything related to Ripple.