What The MoneyGram-Ripple Deal Could Mean For The Cryptocurrency Space
The announcement that Ripple is partnering with MoneyGram International, Inc. (NASDAQ: MGI) has been met with a positive reaction as cryptocurrency goes mainstream.
The blockchain payment company made an initial investment of $30 million in the money transfer company comprised of common stock and a warrant to purchase common stock. Ripple purchased newly issued common stock from MoneyGram, including the shares underlying the warrant, for $4.10 per share.
Money is flowing to where it's treated best, Shane Fleury of CIO Elevate Capital Advisors told Benzinga.
“If MoneyGram is right now using traditional banking services behind the scenes in order to make the app work, to send money, if they're using traditional finance, they have to deal with fees by working with Ripple," Fleury said. "You're seeing MoneyGram wanting to try to remove those fees for their users."
Monday's announcement is only the beginning of publicly traded companies forming serious ties with cryptos, Fleury said.
An 'Ideal' Partner
Ripple has seemingly found an "ideal" and relatively affordable distribution partner with a wide reach, said David Wachsman, CEO of the blockchain strategic advisory firm Wachsman.
"This is a great opportunity for Ripple to showcase the usefulness of xRapid while at the same time reinvigorating a traditional remittance stalwart in need of some competitive upgrades.”
Steve Orr, senior vice president at Benzinga and a board member for the American Blockchain and Cryptocurrency Association, said MoneyGram is a worldwide company and Ripple CEO Brad Garlinghouse has wanted to allow people to send money all around the world without fees — but distribution was the problem.
“Attaching Ripple to MoneyGram [or Western Union] gives the company distribution abilities. Acceptance of Ripple will grow faster than expected. Now you can go to an airport and send Ripple anywhere else in the world," Orr said.
"The acceptance rate is growing, probably exponentially — that's why it's a big deal."
MoneyGram shares closed up 167.59% at $3.88 Tuesday.
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