Ripple’s UK Crypto Licence Application: Breaking New Ground

Overview

Ripple, the company behind the XRP cryptocurrency, has recently applied for a crypto licence in the United Kingdom. This comes on the heels of the organisation’s victory against the U.S. Securities and Exchange Commission over the legal status of the XRP token.

Ripple and Its Vision

Founded in 2012, Ripple is the pioneering fintech company behind the XRP token. It aims to revolutionise cross-border payments and remittances by providing a frictionless and efficient platform for financial institutions. The native token XRP serves as a bridging currency to facilitate seamless currency exchange. 

Ripple aims to establish relationships with banks, payment providers and other institutions to modernise and optimise the world’s existing cross-border payment infrastructure. It empowers individuals and businesses with secure and accessible global financial services.

Also Read: Crypto Maverick Mark Cuban Slams SEC’s Ripple-XRP Approach

The United Kingdom’s Quest for Regulatory Clarity

Among all the countries, the United Kingdom is one that has been keen on cryptocurrencies. The nation has been increasingly attracting crypto firms seeking supportive business environments and regulatory clarity amidst the SEC’s intensified enforcement actions in the U.S. 

Venture capital firm Andreessen Horowitz has announced the establishment of its first new office outside the U.S. in London. This was only possible due to constructive dialogue with policymakers and the FCA. One of the reasons for this move abroad was the predictable business environment in the United Kingdom. 

In another development, lawmakers have been discussing draft legislation aimed at enhancing the ability of authorities to combat the illicit use of crypto and related assets. This proposed bill includes provisions granting authorities greater flexibility in confiscating and recovering crypto involved in unlawful activities.

Also Read: 7 Best Crypto-Friendly Banks to Use in 2023

United Kingdom’s Economic Crime and Corporate Transparency Bill

As mentioned before, the UK has always been one of the leading countries in embracing crypto innovation and providing a regulatory framework for this asset class. In June 2023, Royal assent was given to the Economic Crime and Corporate Transparency Bill, which was then passed through both houses of parliament and became law. The new law brings amendments to the Proceeds of Crime Act of 2002. 

The new law has also brought crypto assets under the same rules as traditional assets. This means that the HM Treasury, the Financial Conduct Authority, the Payments Systems Regulator, and the Bank of England have the authority to regulate crypto-related businesses and ensure they are complying with existing laws. As a result, crypto businesses are now required by law to comply with anti-money laundering and counter-terrorism financing rules, as well as market integrity and consumer protection standards. 

The UK’s approach to crypto regulation is consistent with the country’s vision of embracing technological innovation while ensuring fair and robust standards. The country is also a member of the G7 Cryptoassets Task Force, which aims to foster international cooperation on crypto policy issues. 

Read More: Top 5 Ways to Recover Funds From Cryptocurrency Scams

The Legal Battle Between the SEC and Ripple

The long-drawn-out legal battle between the SEC and Ripple was one of the most talked-about cases in the crypto industry recently. It all began with the SEC filing a lawsuit against Ripple and two of its executives, accusing them of conducting an unregistered securities offering. According to the SEC, XRP is a security and, thus, represents an investment contract or share in a company and, thus, should not be subjected to the same laws applied to stocks or bonds. 

Ripple has argued that XRP isn’t a security but rather a currency or commodity. It was argued that the token is decentralised and independent from Ripple. As a defence, the company relied on a 2018 statement made by an SEC director that Bitcoin and Ether are not securities. 

The court delivered a partial judgement in July 2023. It ruled that XRP qualifies as a security when offered to institutional investors but not when offered to retail investors. Ripple and its community welcomed the decision, as it enabled the token to continue to be listed on crypto exchanges and platforms. Nevertheless, the SEC has the option to challenge the ruling in the forthcoming period.

Conclusion

Ripple aims to create a world where values move as easily as information does in this day and age. It believes that regulations and licencing will allow it to comply with anti-money laundering and counter-terrorism financing regulations. This will allow it to offer its products and services to more customers and partners in various geographical regions, including the United Kingdom.

Frequently Asked Questions

When Did Ripple First Faced Legal Issues?

The first time Ripple faced legal charges was in 2015, when it was fined $700,000 by the US Treasury Department’s Financial Crimes Enforcement Network for violating the Bank Secrecy Act. Ripple failed to register as a money services business and implement anti-money laundering controls.

How Does the New Law Affect Crypto Businesses in the UK?

The new law confers the authority to enact and enforce regulations for crypto businesses in the UK upon the HM Treasury, the FCA, the Bank of England, and the Payments Systems Regulator. Consequently, crypto businesses will be required to adhere to anti-money laundering and counter-terrorism financing rules, as well as consumer protection and market integrity standards.

When Will the Law Come Into Effect?

While the new law received royal assent in June 2023, some of its provisions still require secondary legislation to be implemented correctly. The government hasn’t announced a specific timeline for when the new regulations will come into force.