Cryptocurrency company Ripple Labs will buy back a portion of their own shares. Those close to the matter have claimed that the company will buy as much as $285 million worth of shares. The shares will most likely be purchased from early investors and employees who got them as a part of an employment package.
This is part of a larger offer, and the company will probably buy back the shares worth as much as $500 million. It’s known as a tender offer, and Ripple will proceed with it in the coming months.
What is the plan?
Ripple plans to keep buying shares in the coming months, so it may be a good idea for investors to pay attention to Ripple-related news as they develop. According to Brad Garlinghouse, chief executive at Ripple, It expects to do more share buybacks on a regular basis to provide liquidity for investors and has no plan to go public in the United States any time soon due to regulatory uncertainty,
The news comes at a time when many new crypto regulations are coming into play, and crypto companies are adapting to it.
What’s a tender offer?
A tender offer is a bid to purchase some or all of the shareholder’s stock in a corporation. Offers such as these are made publicly, and the shareholders are invited to sell their shares for a publicly disclosed amount. There’s usually a window of time that the shareholders need to fit into.
Ripple has done all that, and their tender offer is now in full effect. Publicly traded companies often provide such offers to get back some of the shares they’ve sold or distributed before. This has happened here, even though Ripple isn’t publicly traded.
What amounts are we talking about?
Some numbers have been disclosed, but many haven’t been so far. The value of the stocks Ripple has bought isn’t public at this point, except for the overall sum the company is willing to spend on it.
We know that the company is valued at $11 billion and has more than $1 billion in cash and over $25 billion in digital assets, primarily XRP coins, on its balance sheet. We also know that the investors can’t sell more than 6 percent of their shares.
The lawsuit against the SEC
This news comes right after a win that Ripple has had in court. It’s been in a lengthy legal battle against the SEC. Ripple sells its shares on public exchanges, and this presents a legal issue. The court has decided that it has a right to do so and that purchasing shares on a stock market isn’t the same as trading in its coins.
It’s an important legal precedent as it happened at a time when many other cryptocurrencies were looking to start selling EFTs and make their way to the stock market. Many experts believe that the decision to buy back its stocks comes as a result of the verdict.
Buying Crypto at a Stock Market
One of the greatest changes in how cryptocurrencies are perceived and used comes from the ability to trade them in stock markets. This is the next step in the development of crypto and one in which the whole industry is currently engaged, starting with the biggest currencies.
This will be done by using ETFs. These are financial funds similar to mutual funds, but ones that can be bought and sold at the stock market. That way, traditional financial institutions can take part in buying and selling crypto companies without buying actual coins.
What is Ripple trying to achieve?
Ripple hasn’t announced much of its plans publicly, but there is a lot of speculation out there from experts in the field and some with insider knowledge. The simplest explanation is that it’s trying to increase its shares’ value and control of it.
It could also be a part of a broader strategy to position Ripple against some of the larger coins that are trying to make their way to the ETF market. If those are approved by the SEC, it will put them at an advantage compared to smaller coins, and Ripple has always tried to be among the best cryptocurrencies.
What’s the response?
At this point, it’s too early to tell how the employees and early investors will react to the call. It usually takes some time until the investors get the ball rolling, but others will follow once some start selling the shares.
In most cases, calls such as these are welcomed by early investors. They can get a much better price on the shares than the one they’ve paid when buying them in the first place. The same goes for employees who usually get only a small share of the company based on their time in it.
What’s Ripple?
Ripple Labs is an American company founded in 2012. It was originally named Opencoin, but it changed its name in 2015. The company produced its own crypto coin called XRP. It operates in 50 countries and has over 1.000 employees.
Ripple also took part in various ventures and partnerships, including one with ZipZap, to disrupt the traditional banking market. It created a fund to support gaming developers and donates a portion of its profit to US public schools on a regular basis.
How is XRP doing?
The live price of XRP is $ 0.57673 per (XRP / USD) with a current market cap of $31.30B. 24-hour trading volume is $566.78M. XRP to USD price is updated in real-time. XRP is +0.59% in the last 24 hours with a circulating supply of 54.27B.
A fractional .00001 XRP is charged for every transaction processed on the underlying XRP Ledger (XRPL). Another interesting feature of XRP is that miners receive validation fees from the aforementioned charge, as all XRP coins were circulated when the network was first launched.
A wider adoption
There’s a trend for broader adoption of cryptocurrencies in the traditional market. The biggest part is the creation of ETFs, but there are other examples. For instance, more industries are accepting crypto as a payment option, and conservative and traditional financial institutions are also getting into it.
Some luxury goods have also started accepting payments in crypto, which means that they are accepting the investors that have made their fortune on the cryptocurrency market. All of this is leading companies such as Ripple to try to get into new markets.
Conclusion
Ripple is buying back a portion of its shares that it previously sold to initial investors and employees. They’ve allocated about $500 million for that purpose and issued a call to the investors that they are on the market for shares. The investors are only allowed to sell six percent of their overall shares.
This is part of a larger effort by Ripple to improve its standing and to get in on the ETF market. Bitcoin and Ethereum are doing the same, and Ripple doesn’t want to be left behind when it comes to the new wave of crypto adoption. Traditional financial institutions are getting into crypto investing, and Ripple wants to be a part of it.
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