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- FXCoin and Sumitomo Corporation have launched a proof of concept for debt and credit settlement using Ripple’s XRP.
- The platform is intended to serve as a long-term global cash management system.
On November 30, FXcoin Co. Ltd. announced the launch of a proof of concept among the companies of the Sumitomo Corporation group, which will use XRP to pay off debts and credits. According to the company, this is the first time in Japan that a large company has conducted a previous transaction with a virtual currency.
In addition to Sumitomo Corporation, Sumitomo Global Metals and Ripple’s longtime partner, SBI Group, will participate in the project. The proof of concept is to test a system that avoids the risk of exchange rate fluctuations of virtual currencies.
To this end, Sumitomo Corporation uses XRP to settle debts and receivables between the various Group companies. FXCoin will execute Sumitomo Corporation transactions to hedge XRP price fluctuations and sell the corresponding XRP on a certain date.
FXcoin will also develop a new mechanism, similar to the one used in the foreign exchange market, that allows companies and other institutions to set the price of virtual currencies when they send them through the swap market.
Once the price of future money transfers is fixed, it should become easier for companies and institutional investors to use virtual currencies that benefit from small transfers, the announcement says. In a previous statement, FXCoin chief strategist Yasuo Matsuda said of the project’s long-term goal.
In a previous statement, FXCoin’s chief strategist Yasuo Matsuda said of the project’s long-term goal:
Until now, active cryptography has been mainly used for speculative purposes due to the magnitude of price movements … To establish the foreign exchange market and expand the use for real demand, we will proceed with the remittance demonstration experiment internal and overseas remittances through XRP; and finally, global liquidity management, corporate finance and trade.
As reported by the CNF, the project was first announced in July this year. FXCoin is a relatively young exchange that started trading in 2018 and was founded by former employees of Deutsche Bank. In late 2019, it received a license to operate as an exchange from the Japanese regulator, the Financial Services Agency.
Additionally, FXCoin received an unknown amount of investment from SBI Holding in April of this year. SBI Holdings is the biggest Ripple supporter in Asia. Yoshitaka Kitao, CEO of SBI Holdings, is also a board member of Ripple Labs and is a key figure in numerous Ripple and XRP-based projects in Japan.
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