Crypto company Ripple exploring IPO after SEC lawsuit ends

 

Digital asset firm, Ripple is exploring the possibility of an Initial Public Offering (IPO) once its pending lawsuit with the U.S. Securities and Exchange Commission (SEC) has ended, CEO Brad Garlinghouse told CNBC news.

The company usesthe world’s sixth-largest cryptocurrency, XRP, to facilitate cross-border payments. Ripple has been involved in a fifteen-month-long lawsuit with the SEC, which alleges that Ripple’s token XRP classifies as security. Therefore, the SEC’s lawsuit claims that the company executives illegally offered securities while selling XRP.

However, the firmclaims that XRP should not be classified as a security. XRP is currently the sixth-largest cryptocurrency, with a market capitalization of $19.54 billion. It uses the token to offer a cross-border payments system.

“I think we want to get some certainty and clarity in the U.S. with the SEC. You know, I’m hopeful that the SEC will not slow that process any more than they already have done,” Garlinghouse told CNBC news on Tuesday during the World Economic Forum (WEF) in Davos, Switzerland.

Garlinghouse’s comments come amidst a digital currency crash that has wiped billions of dollars of value off of the market. According to CoinGecko, XRP is down 42% in the last 30 days digital assets and digital currency-related stocks have also seen a downfall across global stock indices. Coinbase exchange platform shares are down 75% this year, while Robinhood, which offers digital currency trading, has seen its stock go down by nearly 50%.

Despite the fear and slump in the crypto market, Garlinghouse said that the business continues to grow. In the first quarter, volume for its cross-border payments product that uses XRP, also known as On-Demand Liquidity totaled $8 billion versus $1 billion in the same period last year.

“Our growth is almost all outside the U.S. I think that will probably persist until we get the clarity and certainty in the U.S., we’ve been seeking for 15months,” Garlinghouse said.

Ripple is already profitable and has a positive free cash flow. The company has buyed back nearly $500 million worth of shares over the last two years and invested in around 30-40 companies across the crypto ecosystem, Garlinghouse added. Therefore, Ripple is at a mature stage to look at an IPO.

“We certainly are at a point, wherein that [IPO] is a possibility. And we’ll look at that once we’re past this lawsuit with the SEC.”Garlinghouse said.

But given the lawsuit in the U.S., the majority of firm’srevenue growth has come from outside the U.S.and the situation is dubious to change until the lawsuit ends, Garlinghouse said.The slowed and stunted growth in the U.S. can be attributed to the lack of regulatory “clarity and certainty,” he said.

He added:“I think the overwhelming majority of people working in the crypto currency industry, I think are good actors that want to do right by regulators. But when the rules of the road aren’t clear, it’s very difficult to manage within that.”

Regulatory clarity is crucial for entrepreneurs and investors to participate in the digital asset space. And the U.S. seems to be falling behind on crypto regulations.“Switzerland, Singapore, UK, Japan, even the UAE, is way ahead in providing regulatory clarity and certainty that I think allows entrepreneurs and investors to build on these technologies.”