Nothing boosts the price of a digital asset more than a major partnership announcement. All eyes have been on Bitcoin recently, as it moved beyond the $9,000 price point to reach another 2019 market high on Tuesday amid reports Facebook is planning to launch its own cryptocurrency.
However, Ripple’s XRP token has been moving also following its own big announcement.
The San Francisco-based blockchain company recently announced it was going into partnership with global money transfer firm MoneyGram. The joint venture will have an initial contract term of two years, during which Ripple will act as MoneyGram’s partner for cross border payments and foreign exchange settlements that will be using crypto assets as transfer agents.
Ripple has also agreed to provide a capital commitment of up to $50 million to MoneyGram, which can be drawn over the two year period in exchange for equity. The estimate, according to Ripple CEO Brad Garlinghouse, is that the blockchain company will end up owning between 6% and 10% of the company.
Ripple also used the announcement to say it will be deploy its xRapid platform for use with cross border transfers. The system utilizes Ripple’s XRP token as a real-time virtual bridge between the sending and receiving currencies. The company has always claimed xRapid’s transfer speeds and costs are a fraction of other crypto coins.
It also facilitates on-demand liquidity enabling instant transactions by reducing reliance on pre-funding when purchasing foreign currencies. Using traditional forex markets for international transfers requires advance purchase of currencies which can lead to inflated spreads and volatility. The partnership should enable MoneyGram to use the Ripple token to alleviate this volatility, while reducing costs and transfer times.
MoneyGram operates in the $600 billion global remittance market and supports multiple currencies across more than 200 countries. Chairman and CEO Alex Holmes said Ripple’s xRapid product will give MoneyGram “the ability to instantly settle funds from US dollars to destination currencies on a 24/7 basis, which has the potential to revolutionize our operations and dramatically streamline our global liquidity management.”
Garlinghouse later told Bloomberg it was a strategic partnership that will “enable MoneyGram to greatly improve its operations and enable millions of people around the world to benefit from its improved efficiency.” It was, he added, a “huge milestone in helping to transform cross-border payments and I look forward to a long-term, very strategic partnership between our companies,”
Ripple’s XRP is now the world’s third largest cryptocurrency with a market capitalization of $20 billion. Following the announcement late on Monday, the token surged more than 10% to reach $0.46.