Can the Ripple IPO Succeed?

The crypto ecosystem is not ‘just’ about crypto anymore. The leading companies in the digital asset industry are now planning to enter the traditional financial world. Coinbase is a recent example of the IPO ambitions of prominent crypto players. Ripple, a leading enterprise blockchain and crypto solutions provider, has now joined the list of the companies who are aiming for a public listing or at least planning to do so.

The biggest issue in Ripple’s IPO journey is the lawsuit from the US Securities and Exchange Commission (SEC). Speaking to CNBC at the World Economic Forum, Brad Garlinghouse, the Chief Executive Officer of Ripple, said that the company will ‘look’ at IPO possibilities after the end of the lawsuit. Additionally, Garlinghouse is expecting an outcome of the lawsuit by the end of this year.

The growing adoption of XRP Ledger (XRPL) and RippleNet among institutions to facilitate global payments has contributed a lot to Ripple’s growth in the past few years. “Several state banks have announced interest in Ripple’s services,” Ilman Shazhaev, the CEO & Founder of Farcana, told Finance Magnates.

Ripple’s Q1 2022 XRP Markets report published in May shows that RippleNet started this year with record numbers. Last year, Ripple launched RippleNet’s ODL deployment in the Middle East. Several companies in the region, including LuLu Exchange and Bank Alfalah, started boosting cross-border payments through RippleNet.

But, is it only the performance that guarantees a successful IPO launch? Perhaps not. The stock of digital exchange Coinbase (COIN) made a debut in April last year with an opening price of over $340. COIN is now trading at $70. Clearly, this is not a very ‘promising’ start.

But, analysts believe that Ripple’s scenario is different as strong fundamentals, growing adoption and optimism, in case of a positive outcome for the company in the lawsuit, will make a strong case for a successful IPO launch.

Interest in XRP

XRP has been around for several years in the crypto market. With a market cap of more than $18 billion, XRP is the 7th largest cryptocurrency in the world. Despite a price dip of almost 50% in the last 3 months, XRP whales have kept accumulating the digital asset in large amounts.

Shazhaev believes that investors will be eager to grab Ripple stock because of their interest in XRP. “Investors will definitely be interested in investment products based on XRP, and it does not matter whether it will be stocks or ETF on the coin itself. Ripple has every chance to complete this IPO if it settles the matters with the SEC,” he said.

“To facilitate cross-border payments. Ripple's XRP network cryptocurrency is among the top 10 cryptocurrencies in the world and is compliant with the new ISO20022 payment standard, which will replace the outdated SWIFT system by 2025. The company is focused on optimizing its primarily interbank payment systems but has been in a long-running court dispute with the U.S. Securities and Exchange Commission (SEC). Recently, news has been coming out that could ease supply pressure and reverse sentiment,” Farah Mourad, the Senior Market Analyst at XTB MENA, said.

Acquisitions and Partnerships

Mourad said that Ripple may accelerate its acquisition strategy to expand its global presence. Which eventually will play an important role in the company’s IPO plan. According to her, Ripple’s partnerships across Asia have made a strong case for the company’s successful initial public offering.

“In the future, Ripple will consider a number of acquisitions in the fintech and blockchain industries. RippleNet made the case that Asian fintech startup, Nium has recently financially connected the Americas with countries in Southeast Asia and Australia allowing payments to be settled there faster with small fees in XRP tokens. Ripple also discussed a potential partnership with the Prime Minister of Georgia, where tokens could make everyday life easier for citizens and make investments in Georgia more attractive and accessible,” Mourad explained.

While Ripple’s evident growth has increased optimism regarding its IPO launch, the uncertain outcome of the lawsuit has made it difficult for the company to start exploring IPO options actively this year.