Ripple lurks as R3 and Fnality, aka ‘XRP Killer’, power new FX swaps platform

Rick Steves

Fnality has been dubbed ‘XRP Killer’. It was founded to create a cross-border settlement framework among participating banks that will utilize a fiat-pegged cryptocurrency.

Eleven banks are working together to test a DLT-based platform for intraday FX swaps, a market worth $3.2 trillion in daily volume which traditionally operates overnight.

A DLT-based intraday FX swaps platform should allow treasury teams to borrow for hours at a time, enabling them to efficiently meet a temporary liquidity need.

The technology change not only helps to optimize intraday liquidity buffers, but it also offers an opportunity to lend excess funds, representing a new revenue stream.

The trial had banks engaging in simulated trading and discussion sessions, having executed 76 intraday FX swap transactions, based on 66 orders in a central limit order book and 69 bilateral RFQs, in one of the hour-long simulated trading sessions.

The project is expected to go live later this year or early in 2022. Brian Nolan, co-founder at Finteum, said: “We are excited for the next phase of development. The engagement and feedback from the banks during the trial were very encouraging. It reinforces the value the initiative can offer to banks across all geographies.”

The consortium includes NatWest, Deutsche Bank, Banca Mediolanum, and Bank of Ireland (not the Central Bank of Ireland) and uses technology from Finteum, a blockchain company that has been developing the DLT-based intraday FX swaps platform with R3 and Fnality since 2019.

Fnality has been dubbed ‘XRP Killer’. It was founded to create a cross-border settlement framework among participating banks that will utilize a fiat-pegged cryptocurrency.

The blockchain firm sits in the middle of the transaction flow process using its utility settlement coins (USCs), a lot like Ripple’s XRP.

R3 is a private company that operates the Distributed Ledger Group that works on blockchain-related matters in the financial industry. In 2021, the firm linked its open-source blockchain solution to SWIFT’s payments standard framework at a proof-of-concept stage.

SWIFT has recently announced it is planning to play a unique role in a payments ecosystem that includes central bank digital currencies (CBDCs).

Ripple has been marketing its private version of the XRP Ledger to central banks and many countries have responded positively. It is known that France has its eye on XRP for an upcoming digital euro.

Brazil has recently announced its plan for a digital currency, one year after meeting with Ripple CEO Brad Garlinghouse, but competition is fierce. In 2018, R3 had published a report delivering insights on how to approach a digital currency in the country, with three possible models.

The SEC vs Ripple lawsuit may hamper the firm in the race for CBDCs. Ripple has recently released a white paper making its case for the XRP private ledger as a bridge for central bank digital currencies.

It is unclear if Ripple is addressing central banks with its white paper as a way to put pressure on the ongoing legal battle with the SEC. Either way, central banks may also hesitate to work with Ripple at this particular time.

More so if they lose the case and the firm becomes overwhelmed with private legal claims. Too much uncertainty to deal with while competitors get in line for attention from central banks, including R3’s Corda, Ethereum, Stellar, Hedera, and eftpos, besides the abovementioned blockchain firms.

The lawsuit has had its ups and downs, but Ripple Labs has recently been granted an important win regarding the disclosure of legal advice.

In a move that seems to be attempting to stall the whole legal process, the SEC has asked the court for more time – 60 days – to investigate the case.

In its turn, Ripple filed a motion to compel the regulator to turn over internal documents about their views on BTC, ETH, and XRP. The plaintiff has been refusing to deliver the information despite the Judge’s insistence. The court could order monetary sanctions should the SEC remain uncooperative.

As the industry starts to see a settlement taking shape, attorney Jeremy Hogan shared key insights into what it may look like and its repercussions, including potentially bottleneck the flow of XRP.

Read this next

Digital Assets

AAX ranked world’s second largest spot exchange, only behind Binance

Crypto trading volumes experienced their first surge in activity since March as the majority of digital assets began their recovery from the recent grim price action, according to a new report by Cryptocompare.

Digital Assets

Bitpay teams up with Cardlytics to provide 15% cashback rewards

Crypto payment service provider Bitpay announced a partnership with Cardlytics Inc (NASDAQ:CDLX), which it says will offer more rewards for BitPay cardholders on its platform.

Digital Assets

BlackRock digs further into crypto with spot bitcoin private trust

BlackRock, the world’s largest asset manager with almost $8 trillion in AUM, has launched a spot bitcoin private trust for institutional clients in the United States.

Digital Assets

SEC fines Bloom Protocol, orders refund to BLT token purchasers

Blockchain startup Bloom, which raised $30 million in funds via an initial coin offering (ICO), has agreed to return the money to token purchasers and pay a $300,000 fine, the SEC announced.

Institutional FX

FX volume takes step back at Singapore Exchange in July

The Singapore Exchange (SGX), the country’s paramount exchange operator, has released its monthly volumes across its FX, derivatives and commodities segments for July 2022.

Market News

The Week Ahead: 12 August from David Madden, Market Analyst at Equiti Group

There was a spike in volatility last week when the US CPI report ticked down to 8.5% from 9.1%, missing the forecast of 8.7%. The announcement led to chatter the Fed might not carry out a 0.75% interest rate hike in September.

Digital Assets

Pomelo Pay adds crypto payments capabilities from TripleA

According to a June survey conducted by Deloitte, nearly 75% of retailers plan to accept either cryptocurrency or stablecoin payments within the next two years.

Executive Moves

Talos appoints “boss, mentor, and friend” Neal Pawar as strategic advisor

“Foundational technologies are needed for institutions to fully embrace this potential, however, and in my opinion Talos’s platform is steadily becoming the de facto industry standard for digital asset trading.”

Technology

Avelacom enhances Middle East connectivity amid new market trends

Avelacom found that smaller markets in the region were not sufficiently covered by third-party vendors.

<