Ripple CTO Explains How Bitso Sends Billions in XRP Without Operating in US

Ripple CTO David Schwartz recently clarified how crypto exchange Bitso facilitates billions in XRP remittance without operating in the U.S.

In a recent conversation, David Schwartz, the CTO of Ripple, clarified how the Mexican-based exchange Bitso facilitates the transfer of billions in XRP remittances between Mexico and the United States without a physical presence in the U.S.

Bitso Facilitates $3B+ in Remittances

Tiffany Hayden, a well-known XRP community influencer and former Community Manager at Edge, raised the question, sparking an insightful discussion with David Schwartz and other community members.

Hayden’s curiosity was piqued by a previous report from The Crypto Basic highlighting Bitso’s remarkable success in enabling over $3 billion in remittances between Mexico and the U.S. It bears mentioning that not all this volume involved using XRP or Ripple’s product.

Hayden questioned how individuals in the U.S. could send such significant amounts through Bitso, given that the exchange doesn’t operate within the U.S. jurisdiction.

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— 𝕾𝖈𝖆𝖒𝖘 𝖆𝖗𝖊 𝖇𝖆𝖉 🗝 91.22% (@ScamDetective5) June 23, 2023

Another community member, Scam Detective, joined the conversation, seeking clarification. Schwartz swiftly stepped in to offer an explanation, shedding light on the mechanics behind Bitso’s operations.

Ripple CTO’s Response

Schwartz clarified that Bitso’s operations do not require a physical presence in the U.S. Instead, Bitso serves as an intermediary, converting the received XRP to Mexican Pesos (MXN) and facilitating domestic payments to the recipients in Mexico.

Why would Bitso need to operate in the US for this? Bitso just converts received XRP to MXN and makes a domestic Mexican payment to the recipient.

— David “JoelKatz” Schwartz (@JoelKatz) June 23, 2023

The sender in the U.S. needs to transfer XRP to Bitso, which then carries out the necessary conversions and delivers the MXN to the recipient.

Jungle Inc., another active participant in the conversation, sought to confirm whether this process aligned with Ripple’s On-Demand Liquidity (ODL) solution.  Schwartz elaborated that Bitso’s role in the USD to MXN ODL flow remains the same. Whether using ODL or not, Bitso performs the crucial task of converting XRP to the destination currency while also handling the final delivery of funds.

Schwartz provided further clarification in response to Jungle Inc.’s query about opening a Bitso account in the U.S. for sending XRP. The CTO explained that individuals in the U.S. don’t necessarily need to create accounts with Bitso.

Instead, recipients in Mexico can open Bitso accounts, and anyone globally with access to XRP can send funds to them. Bitso then takes care of the XRP to MXN conversion and ensures the smooth transfer of funds.

You don’t need to. The person in Mexico could open a Bitso account and then anyone in the world who could buy and transfer XRP could deliver money to them. Bitso would do the XRP->MXN conversion and the last mile.

— David “JoelKatz” Schwartz (@JoelKatz) June 24, 2023

The conversation revealed that Bitso’s success in facilitating cross-border remittances between the U.S. and Mexico, especially regarding Ripple’s product, hinges on its ability to convert XRP to MXN and handle the last-mile delivery. 

Schwartz emphasized that even within Ripple’s ODL framework, Bitso remains responsible for the conversion and delivery of the destination currency, maintaining no involvement with the source currency or country.

David further said that “XRP transfers value to Bitso in this transmission.”

XRP transfers value to Bitso in this transmission.

— David “JoelKatz” Schwartz (@JoelKatz) June 24, 2023