Ripple Labs, the $10 billion valuation startup behind the digital currency XRP, has ridden a wave of interest in crypto: Transactions on its payment network gained 33% in the third quarter, bolstering its bank balance to more than $500 million. Blank-check companies have approached the firm about taking it public through a merger, said CEO Brad Garlinghouse in an interview.
But things could be going even better. Before the Securities and Exchange Commission sued the company in December over charges that Ripple had violated securities law, Ripple’s currency was the third most popular cryptocurrency. Now, XRP has faded to No. 6 by market capitalization, and the startup has lost a lucrative deal with money-transfer firm MoneyGram.
“The SEC’s posture towards crypto in the U.S. is definitely hurting innovation,” said Garlinghouse, 50. He said clear regulation is pushing entrepreneurs overseas, a sentiment echoed by Coinbase CEO Brian Armstrong. The “U.S. has not provided those same opportunities for fertile ground to germinate the next Amazon” of crypto, Garlinghouse said.