Ripple Makes Waves With USDT Transition for ODL Services

Recent disclosures have revealed substantial changes within Ripple’s blockchain payment protocol in response to Bill Morgan’s concerns about the SEC legal battle and Ripple’s On-Demand Liquidity (ODL) operations. Ripple has transitioned its ODL services for US clients from XRP to Tether’s USDT, as indicated in a recent court filing.

Ok Matt. Didn’t have time yesterday but given that you were kind enough to cover this issue on YouTube I have followed up on the point you made about Ripple not having ODL customers and operating through overseas subsidiaries, in response to my concern that a wide injunction can… https://t.co/Lt2OflA9K6 pic.twitter.com/QmymbOEATV

— bill morgan (@Belisarius2020) April 26, 2024

This transition follows a court ruling last year that deemed the institutional sale of XRP tokens in violation of US security laws. Consequently, Ripple engaged non-US entities to facilitate XRP sales to ODL customers, with US-based clients now using USDT as the bridge currency for transactions.

Moon Lambo, an XRP Youtuber, took to the X platform to assert that Monica Long, Ripple’s President, emphasized swift compliance with legal restrictions while ensuring uninterrupted ODL services for US clients. He further stated that a Singaporean subsidiary of Ripple now serves as the primary contracting party for XRP sales, indicating a strategic shift towards non-US entities to circumvent legal hurdles.

Ripple President Monica Long says they don’t have any ODL customers. According to Ripple’s latest filing, a Singaporean subsidiary has ODL customers using $XRP, but Ripple itself does not. Would an injunction to stop’s Ripple’s ODL apply to Singaporean subsidiary? If not, then as…

— Moon Lambo (@MoonLamboio) April 25, 2024

Furthermore, internal communications revealed that Ripple implemented minimum asset requirements for ODL clients, with a $5 million threshold to ensure financial robustness. Exceptions are made for “otherwise sophisticated entities,” reflecting Ripple’s commitment to safeguarding end customers amidst regulatory challenges.

However, concerns persist regarding the impact of a wide injunction sought by the SEC on Ripple’s overseas subsidiaries and their ODL operations. While Ripple itself does not have ODL customers, its subsidiaries reportedly do, raising questions about the applicability of injunctions to non-US entities.

Furthermore, Moon Lambo suggests that as long as ODL transactions do not touch US jurisdictions, they may continue unhindered. This uncertainty underscores the complex regulatory landscape Ripple navigates as it seeks to maintain its position in the digital payments ecosystem. As the legal saga unfolds, Ripple’s adaptation to regulatory challenges will continue to shape the future of its ODL services.

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