OPINION: It is well known that the SBI Group of Japan is in a high-profile partnership with Ripple Labs, with the reason being to “leapfrog Japan’s local payment systems”. Brad Garlinghouse himself offered a quote on the matter, stating that the existing systems were not up to the task.
Ripple and Japanese FX markets:
However, a theory by slinuxuzer stated that this might not be the only reason Ripple entered the market. The full details of the theory can be found here. The important takeaways from the theory are that Ripple plans to enter the Japanese FX market through SBI Holdings, keeping in mind their original cross-border payments philosophy.
Moreover, the market share held by the Japanese Yen [JPY] in the global forex market closes at a daily volume of ~$950 billion. The capture of even 1% of this market would result in the trading volume of XRP increase by many times its current value, from $175 million to $9.5 billion.
Yoshitaka Kitao, the CEO of SBI Group, has voiced his appreciation for XRP on many occasions. One of his most-quoted statements about the cryptocurrency is:
“XRP is faster, cheaper and more scalable than any other digital asset. I strongly believe it will become the global standard in digital currencies.”
This seems to lend a bit of credence to the theory stated by slinuxuzer, especially considering that Kitao posted AMBCrypto’s coverage of the theory on his personal Twitter handle.
Ripple’s Japanese dreams: What is going on with their SBI partnership? – https://t.co/zdlMdsTSvd
— 北尾吉孝 (@yoshitaka_kitao) July 17, 2018
xRapid and SBIVC:
The way that xRapid is able to settle cross-border payments within minutes is by using XRP as a bridge currency. In a JPY to USD transaction, JPY is converted to XRP using a Japanese exchange through banking systems, sent on the XRP Ledger to the wallet of an American exchange, and converted into USD at the other end. This is then processed through local payment gateways and paid out.
Speculations of SBI using xRapid are further reinforced by Ripple’s statement concerning the launch of SBI’s Virtual Currencies exchange platform. They state:
“Ripple will eventually integrate SBI VC’s APIs so that xRapid users — payment providers and banks who are transferring money into and out of Japan — can convert XRP to JPY and JPY to XRP instantly through SBI VC.”
SBI’s annual report included mentions of achieving ‘synergy’ with their forex, securities and cryptocurrency businesses. This would imply that the on-demand liquidity required for xRapid will be sourced from SBIVC, which has an expected customer flow of 4.2 million users.
Another important thing to note is that xRapid provides 40%-70% cost savings over existing solutions. It also settles cross-border in spans of time measured in minutes.
SBI FX’s new campaign:
SBI Holding’s Foreign Exchange [FX] arm recently announced the launch of a new campaign aimed at cutting costs. The campaign offers different pairs with Japanese Yen such as Turkish Lira, Chinese Yuan, Euro, Great Britain Pound and Australian Dollar. Most interesting is that the cost savings range from 30%-60%, as seen by the spreadsheet below.
The campaign could be a possible trial run for xRapid, as SBI has shown its positive outlook towards products based on the XRP Ledger. The campaign is set to run from July 30th to September 1st.
Another small detail to be included is that the Ripple-maintained XRP Charts website will not offer historical data “temporarily”. The message on the website reads:
“Beginning Friday, 07/27/18, historical data on XRPCharts after 30-days will be temporarily unavailable as servers are upgraded. Your patience is appreciated.”
This coincides closely with the launch of SBI’s FX campaign. Although many of the points mentioned here are speculative in nature, it is only based on statements made by parties involved in the matter.