New York’s Department of Financial Services (DFS) has approved the Ripple Labs’ application for a virtual currency license – commonly known as a BitLicense.
The license will allow the company to sell and custody XRP, the native asset that powers its Ripple consensus ledger (RCL), for institutional investors and financial institutions in New York.
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Ripple co-founder and CEO Chris Larsen said: "Earning the BitLicense is incredible validation of the institutional use of digital assets by DFS, one of the most influential state regulators. I’m proud of the work of our regulatory relations team, led by Ryan Zagone.
"With the BitLicense in hand, we look forward to working with our New York bank customers seeking to use XRP for liquidity and cost savings."
Ripple said that instead of holding local currency in nostro accounts around the world, banks can use the its network to consolidate their liquidity for global payments into one XRP account, held on their own balance sheets.
"This singular XRP pool then allows respondent banks to allocate less total capital to service the same volume of international payments. As a result, respondent banks that use Ripple with XRP as a bridge asset can save up to 42% on costs today and up to 60% as market adoption of XRP grows," the company claims.
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By GlobalDataRipple filed its application for the license under its corporate name XRP II LLC, a venture backed by Andreessen Horowitz, Google Ventures and IDG Capital Partners.
New York became the first US state to issue extensive rules for virtual currency companies. The rules were finalized and came into effect in June 2015. The State’s financial watchdog has received 26 BitLicense applications, but has approved only four till now.
