A high-profile financial technology company could move out of the United States. The CEO of cryptocurrency venture Ripple (XRP) is thinking of moving his company’s headquarters to London.
Brad Garlinghouse thinks the United Kingdom’s regulatory environment is more favorable than the USA’s, CNBC reports. Garlinghouse is investigating Switzerland, Singapore, the United Arab Emirates, and Japan as possible new homes for Ripple, Pymts.com notes.
Ripple’s executive chairman Chris Larsen even mentioned the possibility that his company could move to Britain or Singapore at the 2020 LA Blockchain Summit, Pymnts.com reports. Ripple’s current headquarters is located in San Francisco.
I think Garlinghouse and Larsen fear the US Securities and Exchange Commission (SEC) could ban Ripple (XRP). Notably, The SEC blocked Telegram’s TON cryptocurrency scheme last year. I think the SEC could target Ripple which banks and companies use for wire transfers and remittances.
Will Banks and Finance Flee the United States?
I think Garlinghouse and Larsen are voicing what many Fintech, banking, investment, and technology executives and entrepreneurs are thinking.
Those people fear the United States is no longer a safe place to conduct business. The executives fear that coronavirus, political unrest, riots, violence, economic upheavals, and income inequality make America a dangerous place to do business.
Riots brought New York City, America’s financial capitol to its knees over the summer. Police were unable to stop mobs from vandalizing and pillaging hundreds of shops in Manhattan in June and July 2020.
Such violence makes places such as London, Tokyo, Berne, and Singapore attractive in comparison.
Will Coronavrius Drive Companies out of the United States?
America’s out-of-control coronavirus pandemic could be another factor in Ripple’s relocation considerations.
On 27 October 2020, Worldometers estimates America had experienced 231,193 coronavirus deaths. Moreover, Worldometers recorded 5,329 new coronavirus in the United States on the same day.
In contrast, Worldometers estimated the United Kingdom had experienced 44,998 coronavirus deaths. Moreover, Worldometers estimates there were 2,225 coronavirus deaths in Switzerland and 1,718 coronavirus deaths in Japan by 27 October 2020.
America’s Dysfunctional Government
I think an even greater factor in Ripple’s decision making could be America’s dysfunctional federal government.
Both the executive and legislative branches of the federal government have been incapable of taking the actions needed to contain coronavirus or alleviate its effects. For example, President Donald J. Trump (R-Florida) has refused to consider nationwide mask orders or economic shutdowns to contain the virus.
To explain, the COVID-19 is an airborne virus that spreads when people breathe out. Masks catch the virus and prevent it from spreading. Trump has refused to wear masks in public or encourage his childish followers to wears. Similarly, Trump has held massive rallies with no social distancing during his reelection campaign.
Notably, Japan is one of the countries that Ripple’s executives are looking at.
America’s Dysfunctional Politics drives corporate flight
Similarly, the U.S. Congress has refused to take action to alleviate the economic effects of the Coronavirus.
For instance, U.S. Speaker of the House Nancy Pelosi (D-California) blocked a $1.52 trillion stimulus package in September 2020. Many pundits allege Pelosi blocked stimulus because she feared it could help Trump win the 3 November U.S. Presidential election.
Meanwhile, in the U.S. Senate both Democrats and Republicans are blocking stimulus bills. On 22 October 2020, Senate Democrats blocked a slimmed-down coronavirus relief view just weeks before the national election.
Additionally, US Senate Majority Leader Mitch McConnell (R-Kentucky) refuses to consider large stimulus measures for ideological and political reasons. In particular, McConnell is hostile to economic assistance to ordinary people.
Why Ripple is considering a move to London
In contrast, the Conservative British government has borrowed £372 billion ($486.09 billion) to finance generous coronavirus relief schemes. Under the schemes, Her Majesty’s Government paid up to 80% of the salaries of employees unable to work because of coronavirus.
I think the British government’s willingness to spend money to deal with coronavirus is one reason why Garlinghouse and Larsen are considering a move to London. The United Kingdom has an effective, responsible, and stable government, the United States does not.
British Conservatives led by Boris Johnson put ideology aside and took the drastic actions needed to alleviate the pandemic’s effects. American politicians on both sides of the aisle are playing politics while the nation burns.
Larsen and Garlinghouse are looking at London because they think Britain will have a stable democratic capitalist system for years to come. The two men are not so sure about the United States.
Expect a Corporate Exodus from the United States
I think Ripple’s exit from the United States could be the beginning of a corporate exodus from America.
I predict many large banks, tech companies, entertainment companies, and other corporations will flee the United States once coronavirus travel restrictions end. In particular, I think many big banks and entertainment companies will flee to London, Singapore, and Shanghai.
Similarly, many manufacturing companies will move their offices to Toronto. Tech companies will probably move to China or Taiwan. A few businesses will head for Australia and Switzerland.
The Corporate Exodus Begins
A similar development will be corporations retaining a token or sham office in the United States but moving all their operations elsewhere. For instance, Tesla Motors’ (NASDAQ: TSLA) shipped the first 7,000 Model 3 cars from its Shanghai Gigafactory to Europe on 26 October 2020.
Or Apple (NASDAQ: AAPL) could quietly move its offices to Dublin. Apple maintains its European headquarters in Ireland and manufactures most of its products in China. Meanwhile, Disney (NYSE: DIS) could move its film and TV production to England and open a new office in Shanghai.
The Corporate Exodus will shock many Americans and “leaders” such as Trump, McConnell, and Pelosi will find themselves powerless to stop it. I predict the Corporate Exodus will become a major political issue in the United States soon.
What Value Does Ripple (XRP) Have?
Ripple (XRP) was the fourth-most valuable cryptocurrency on 29 October 2020. CoinMarketCap estimates Ripple had an $11.103 billion Market Capitalization, a $2.089billion 24-Hour-Market Volume, and a 24.4₵ Coin Price on that day.
I find Ripple (XRP) interesting because it was the first cryptocurrency they built for a mass market rather than speculators. For instance, Ripple has no Maximum Supply. That means they can create unlimited amounts of Ripple and keep the Coin Price low with inflation.
Ripple concentrates on building practical solutions for ordinary people such as its RippleNet that enable cheap cross-border real-time payments in 40 countries. Ripple works with major banks such as Banco Santander SA (NYSE: SAN) to offer remittances to automatic teller machines (ATMS).
Ripple is experimenting with instant remittance payments between countries such as Japan and Thailand. Many Thais work in Japan and send money to family back home.
Hence, one reason Ripple could leave America is the blatant xenophobia and hostility to foreign trade in the Trump administration. Notably, Trump threatened to ban the popular Chinese-owned video app TikTok in August 2020. Similar xenophobia is growing the Democratic Party.
Is Ripple Scalable?
Similarly, Ripple (XRP) claims to have “The Most (Demonstrably) Scalable Blockchain.”
Ripple claims its blockchain can transmit up to 1,500 transactions per second (TPS). Thus, Ripple’s blockchain could process up to 1,500 TPS without crashing.
In contrast, Blockchain.com estimates Bitcoin’s (BTC) blockchain was processing 4.27 TPS on 27 October 2020. That means a payment app could crash if it tries to process five Bitcoin transactions at once.
Hence it could take several hours for a massive multiplayer online game (MMOG) platform to process a few dozen Bitcoin payments. I do not think the average gamer will wait several hours to purchase the new weapon he wants. Nor is anybody going to stand around the ATM and wait several hours to get the cash her son is sending from Tokyo.
Thus, Ripple claims to have the technology I consider the key to popular adoption of cryptocurrency scalability. However, several other organizations including Blockone; the organization behind EOS (EOS), the Raiden Network (RDN), and the Lightning Network make similar claims. On the other hand, Ripple is the only organization I know of that claims to demonstrate blockchain scalability in the real world.
Will Ripple Lead the Corporate Exodus from America?
Investors and speculators need to watch Ripple (XRP) closely because its potential American exit could mark the beginning of a paradigm shift.
That paradigm shift is a corporate exit from the United States and the end of American economic domination. I cannot see how the United States can remind the world’s dominant economic power and a superpower if corporations are afraid to domicile within its borders.
Such an exodus could be catastrophic for some American regions including New York and Northern California. Only history will tell if America can stem the corporate exodus and preserve its power. However, recent events show America’s leaders are clueless and incapable of serious action.
I think all will take for prominent American companies such as Disney (DIS), Goldman Sachs (GS), and Apple (AAPL) to flee the United States is a few weeks of civil unrest or a worse pandemic. Hence, an event such as a contested presidential election could spark an all-out corporate exodus from America.
If Ripple (XRP) starts a corporate exodus Americans will have only themselves to blame. Ordinary Americans voted for the buffoons in Washington DC and tolerated the clownshows on Capitol Hill and in the White House for far too long.
A simple decision by Ripple executives to move their corporate offices could mark the end of American economic power.
Originally published at https://marketmadhouse.com on October 28, 2020.