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Is it legal to launch a new crypto-currency on top of the Ripple?


DanielW
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Hello,

We're working on a project in a third world country with a lot of legal restrictions, yet much more IT potential, and after a small research of one month here are few points that must be taken into consideration:

- The country uses its own currency, and any other foreign currency use within the territory for whatever reason is prohibited by law, and in most cases it's punishable by prison and heavy fines.

- No transactions are allowed if the money transfer is to be sent outside the borders, so even Western Union can only receive and not send anything out.

- Receiving Transactions from abroad is only allowed when sent directly from a physical entity to a physical entity and no party is a moral one only, i.e. you cannot receive funds sent to you from a company abroad for whatever reason, it has to be from a physical person's bank account.

- All funds sent from abroad that abide by the laws will be automatically converted into the Local Currency when you issue a Withdrawal.

- They have a good IT infrastructure, but because of the lack of trust and disorganized legacy-like payment methods, there are no on-line banking, except checking out your bank balance, which is updated each night after 12pm, and no money movement from account to account or bank to bank; you have to go in a long queue in your bank to do such an easy operation.

- Very few people, even less than %1, could issue a Visa or Mastercard cards, and they have to fund them with either USD or EUR and justify how did they get the foreign currency :/

- They use a self made Inter-Banks-Card, which can allow you to withdraw the equivalent of $180/daily, and they're just starting to allow it to be used by Merchants online after a long process, and so far their stats show an approval rate of less than %3, the rest of the online Merchants said they received no emails or contacts about their Requests to be accepted even after one year.

- The country has made a law to move to e-governance by 2020, and they've so far created Biometric IDs, Biometric Passports, Inter-Banks-Cards, e-Birth-Certificates, e-Commerce-Registers, e-SSNs...etc (The laws are changing quickly and adopting the e-World)

- 3G and 4G are used by more than %65 of the Mobile Subscribers.

- The country is 40 Million citizen, where they have a 26 Million ADSL subscription.

So far those are the main factors there, and I have avoided so many minor ones, and in an online survey we've got these:

%87 Felt a huge need to have a Mobile Payment Method

%92 wanted to see an easily acquired Online Payment method that everybody can use.

%100 wanted to never show up in a long queue to send/receive money, which usually takes minimum 40 minutes, and max could be a whole day.

____________________________________

There comes our idea:

Since the country doesn't allow the use of an external payment method, the solution must be local, and because we see the Ripple as a great tool to resolve such a problem, we asked the questions:

- How about if we use the same Source Code of Rippled with the same concept of XRP, only under an independent name of the Protocol and the Crypto-currency that are more friendly to the ears of that Gov.

- Run the Gateway locally on a Local Server.

- Issue the eCurrency the same way Ripple was issued.

- Launch the Desktop and Mobile Wallets with eCommerce in mind from the beginning providing an API and Shopping Carts' Modules to be used.

- Try to get a contract with a major bank, and a major Mobile Provider to accept to be on the Platform to seduce the rest after a Trial is made.

- Provide the same online KYC to allow Wallets to be created for free, since that country is very strict about money movements, so they ask about tons of papers, and we can just ask for the most important ones Online only to make it possible for anyone to own an e-wallet.

- The Platform will already be compatible with the Ripple, so anytime soon the laws change and allow Foreign Financial Interactions, we can switch purely to Ripple and get the Local-Currency on the exchange markets like the rest of the Crypto-Coins.

- On a later stage, the platform will try to link all the national banks under one common Blockchain to serve for instant money transfers and settlements :)

____________________________________

Questions

1- Will such a project need any extra Licensing from Ripple?

2- Is it allowed to use the same XRP coins' generator to generate the new Tokens as well? If yes, how could it be found?

3- Does the License allow changing the name just by giving Credit to the original creator "Ripple Labs"?

4- In case all the above are positive, will it be accepted to get into the Ripple's Gateways before any foreign transactions are allowed, just to allow Monitoring and Stats on the Network?

It sounds complicated, but looking forward if anybody can provide an answer, advice, evaluation, feedback, free opinion, or anything else related to the Legality, technicality, Viability or Validity of such a project?

This project has become more persistent when Mitsubishi and Senegal announced to be creating their own e-currencies; my partner thought we should move forward too, and because we will never be able to do the same research and use-cases Ripple has already done and achieved, then if it's allowed why not use their protocol, and if things kick off, we can even back Ripple Labs officially on the long run.

 

Edited by DanielW
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Some quick thoughts:

First, it is completely your responsibility to comply with local laws.

Second, Ripple is a trademark. You should not call any product you create Ripple or use the term XRP to refer to anything that isn't actually XRP. We do have branding guidelines for how you can use the term "Ripple" to indicate that you are using source code made by Ripple or using the Ripple network.

Third, you have a fundamental choice to make between using the Ripple network or using the rippled source code to make your own network. Rippled is open source and the license pretty much lets you do whatever you want with the code. If you need to make significant changes to the code such as your own transaction types or private transactions, you have no choice but to run your own network. But if you just want to transact in custom assets, there should be no reason you can't just use the existing Ripple network. You will need to acquire XRP on the market to create accounts and fund transactions, but these amounts are small and we expect them to remain so. RCL was originally designed specifically to allow people to launch and trade custom assets.

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2 minutes ago, JoelKatz said:

Some quick thoughts:

First, it is completely your responsibility to comply with local laws.

Second, Ripple is a trademark. You should not call any product you create Ripple or use the term XRP to refer to anything that isn't actually XRP. We do have branding guidelines for how you can use the term "Ripple" to indicate that you are using source code made by Ripple or using the Ripple network.

Third, you have a fundamental choice to make between using the Ripple network or using the rippled source code to make your own network. Rippled is open source and the license pretty much lets you do whatever you want with the code. If you need to make significant changes to the code such as your own transaction types or private transactions, you have no choice but to run your own network. But if you just want to transact in custom assets, there should be no reason you can't just use the existing Ripple network. You will need to acquire XRP on the market to create accounts and fund transactions, but these amounts are small and we expect them to remain so. RCL was originally designed specifically to allow people to launch and trade custom assets.

That's nice, so let's say we want to use the XRP, but for our own set price.

Let's say we'll buy 100K XRP and use it only Internally on our Gateway, but we treat its value as $1B to allow all sorts of transactions to move through our Gateway, and we shall only allow Wallets created by us to use the Gateway too, will this be possible or not?

Yes, we want a new name for the Currency, and we want an independent one, so if we don't have to mention the word Ripple it would be our pleasure; we thought we must give Credit to be able to use the same technology, and it seems we're free to do so.

If we cannot set a custom price for the XRP, then we will forge it and create a new Crypto-currency, but can we have the Coins/Tokens generator code that was used for XRP or we have to create our own?

Thanks for the quick swift answer! You rock guys! Thumb's up!

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What I've seen so far is if you back your "new currency" you can give it any value you want.

Example: You say 1 XRP is worth 1DanielW...the account that emits the DanielW has to have enought funds so that when I try to exchange that currency back to XRP the price is stil 1 to 1.

Edited by Malloy
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4 minutes ago, plutopark said:

@JoelKatz, I would like a copy of the Coins/Toeksn generator code, too!

There's no special code. If you want to call your coins ABC and you want to send someone 100 ABC, you should just be able to use any wallet to send them 100 ABC.

About the only tricky thing to do to be an issuer is to set the "DefaultRipple" flag on your account.

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12 minutes ago, JoelKatz said:

There's no special code. If you want to call your coins ABC and you want to send someone 100 ABC, you should just be able to use any wallet to send them 100 ABC.

About the only tricky thing to do to be an issuer is to set the "DefaultRipple" flag on your account.

One final questions' stage then:

Since we don't want any problems with the law-makers, can we make our Currency non-exchangeable against any other FIAT or Crypto-Currency just to not violate the Country's restriction of money movements?

Also, can we make sure nobody is able to add to his wallet the Local Currency bought from a 3rd-party Gateway, i.e. Person A buys from gatehub XYX currency and sends it to his Wallet on our Gateway to be used on our platform? Can we reject all external transactions?

If we want to link our Currency-value to Gold, will Ripple provide something to do it automatically, something to move instantly with XAU charts? We'd rather stick to stability over Demand and Supply scenarios to avoid any future Pump and Dump scams, otherwise, to be linked to the Local-Currency's value using XE API or something similar.

Ripple says Banks don't need to own XRP to do transactions. Does that mean we need to own only the transaction's fee, and we can still process a million dollar worth of a transaction without owning a million dollar worth of XRP?

Thanks for your patience, it is indeed appreciated.

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9 minutes ago, DanielW said:

can we make our Currency non-exchangeable against any other FIAT or Crypto-Currency just to not violate the Country's restriction of money movements?

From a traders point of view, I don't see how you can do this. If you can have 1 XRP for 1 DW and 1 XRP  for xxxUSD you can create a pair with DW/USD and see the autobridge market take its course.

Edited by Malloy
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9 minutes ago, DanielW said:

Also, can we make sure nobody is able to add to his wallet the Local Currency bought from a 3rd-party Gateway, i.e. Person A buys from gatehub XYX currency and sends it to his Wallet on our Gateway to be used on our platform? Can we reject all external transactions?

All the wallet I've tried leave the owner to choose what Gateway they trust and what currency they add. That's the point - maybe I'm over my knowledge here :-)

Edited by Malloy
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1 minute ago, Malloy said:

From a traders point of view, I don't see how you can do this. If you can have 1 XRP for 1 DW and 1 XRP  for xxxUSD you can create a pair with DW/USD and see the autobridge market take it's course.

If that's really the case, then we'll have to run our own Rippled and not get connected to other Gateways, unless we want to bring the project to jeopardy before its inception. Laws are something we don't want to mess with.

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7 minutes ago, DanielW said:

Ripple says Banks don't need to own XRP to do transactions. Does that mean we need to own only the transaction's fee, and we can still process a million dollar worth of a transaction without owning a million dollar worth of XRP?

Banks have USD, EUR, JPY, etc...they want to pair USD/EUR for example...as long as they back USD and EUR, they don't need much XRP except to "oil" the network.

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I believe your project is interesting and the potential to use XRP a good idea. You could create your own apps that doesn't give the user the option to add/change gateways. The Ripple network would still do what it does (create links between currencies and XRP) but your users would comply with the local (to be verified) if they don't deal in any other pairs with your proprietary apps.

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12 minutes ago, Malloy said:

Banks have USD, EUR, JPY, etc...they want to pair USD/EUR for example...as long as they back USD and EUR, they don't need much XRP except to "oil" the network.

Hmm, this is interesting. So if we create our own tokens, then we have that. If we exchange parts of the tokens into the Local currency for how much capital we've deposited in the local bank, then our Gateway can accept to receive those local coins manually. I mean there must be a way to claim a certain reserve of a certain currency on your network, thus the pair can be created between DW/CountryCurrency.

We'll see if we can create an API that adds only our clients Wallets to use our Trustline, otherwise, we'll create a Wallet that is linked to a Ripple Wallet, but via the Transactions' chains/log we'll validate only the transactions that went to/from us to them, or between our clients.

1- As of stopping them from exchanging that against BTC or XRP, I think of a drastic approach, which is to provide DW for a lower price against all the other currencies except the CountryCurrency, which is to be researched if it's possible.

For example:

  • 1 XRP => 1000 DW (Custom value)
  • 1 DW => 1 CountryCurrency (Custom Value)
  • 1 XRP => 0.02 CountryCurrency (Real market value)

So if someone bought 10 XRP and converted it to CountryCurrency he'd get: 0.2 CountryCurrency, so if he sends it to his Wallet in our System and wanted to get DW, he'd only get: 0.2 DW instead of getting 10000 DW.

That would do for preventing them from abusing the CountryCurrency, as for them converting XRP to DW externally then sending it to their Wallets, then our Custom Made Wallets will be linked to the Ripple Wallets and only use the Validated DW tokens that were recorded coming from us or an Internal Wallet, so any DW leaving to an offline or cold or 3rd part wallet will be useless to come back.

2- And even a Harsher and more easier solution to use is mainly to do all the Transactions on DW/DW, while our Internal System sets a Custom Price for the CountryCurrency on our Payment Platform DB not the Ripple one, so our Trustline will only hold the DW and only use the DW on ours, and if they want to import it from an external wallet, it won't be our responsibility, rather the user's one, who has gone through a KYC, so they should be careful about what they do.

3- A more severe approach, which I think is best is to provide them DW Wallets that are created independently and Tied to an Automatically Created Ripple Wallet that our System would create with each new DW Wallet, and the Secret Key is only known in our System, so they will have no option to trade over the Ripple Network using their DW coins issued by us, and will have no direct access to the Ripple Wallets linked to their DW ones, and this way we can sleep in peace knowing we're a %100 law-complying company.

What do you suggest we should use? The last option seems a bit less complex to implement, isn't it? I'm just brainstorming here, and your input will be very helpful.

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Or just have a private ledger that is RCL enabled (wallets/apps built on top your own ledger with behind the scenes settlement on RCL), or only offer gateway services to prefered customers (ie. Local jurisdiction), or several other ways to add layers between your user base and ripple itself.
Personally I would look into selling the transparency of ripple as a feature. As for limiting trades to specific IOUs - capital flows to the path of least resistance, creating your own market between your preferred assets would go a long ways to controlling what is traded.

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10 minutes ago, Mercury said:

Or just have a private ledger that is RCL enabled (wallets/apps built on top your own ledger with behind the scenes settlement on RCL), or only offer gateway services to prefered customers (ie. Local jurisdiction), or several other ways to add layers between your user base and ripple itself.
Personally I would look into selling the transparency of ripple as a feature. As for limiting trades to specific IOUs - capital flows to the path of least resistance, creating your own market between your preferred assets would go a long ways to controlling what is traded.

I agree, and I would hate to see people crippled by such draconian laws too, but what else can be done? Their parliament or gov or whoever is in charge should solve that for them first.

For us, it's a niche market and a fresh and free one with very little competition, and has great potential, so we'd like a portion of the pie as early as possible. I believe I'm starting to have a crisp and clear idea how we can handle it.

Amazing how the brain works and improves by being exposed to other peoples' thoughts!

Edited by DanielW
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