Cryptocurrency company Ripple announced on Friday it will acquire Fortress Trust, a startup specializing in crypto infrastructure, giving it a license in Nevada and allowing it to expand beyond its core bread and butter of blockchain-enabled payments.
Ripple did not disclose the terms of the deal.
Founded in 2021 by Scott Purcell, an entrepreneur with a background in equity and debt crowdfunding, Fortress Trust aims to help large enterprises interact with digital currencies. Purcell was formerly CEO of Prime Trust, a crypto custodian which shut down after BitGo abandoned a deal to acquire the firm.
Ripple is mostly known for its role as a cross-border payments firm. The company uses a blockchain-based messaging system, akin to SWIFT, to approve speedy transactions between a network of banks and other financial institutions.
Ripple’s partners include Britain’s Modulr, Singapore’s Nium and Japan’s SBI Remit.
The company also uses XRP, a cryptocurrency it owns a significant portion of and has become closely associated with, for cross-border payments between banks and other financial institutions.
XRP didn’t move substantially on the news. The token was up about 0.4% in the past 24 hours, trading at a price of 50 cents.
Ripple has struggled in recent years, with the U.S. Securities and Exchange Commission targeting the firm with a lawsuit alleging XRP should be considered a security and that its executives sold over $1 billion worth of the token to investors in an illegal securities offering.
Ripple had previously partnered with MoneyGram, which used XRP in a pilot to make instant transfers, using XRP as a “bridge” currency to move funds without the need for pre-funded accounts. Following the lawsuit, MoneyGram and Ripple abandoned their partnership in March 2021.
In July, though, Ripple secured a key victory as a judge ruled that the XRP token was “not necessarily a security on its face.”
Ripple has seen momentum in its business build recently — particularly outside the U.S., where most of its clients are based. Asked whether the ruling meant that American banks would return to Ripple to use its ODL product, Stu Alderoty, Ripple’s chief legal officer, told CNBC, “I think the answer to that is yes.”
Fortress is Ripple’s second acquisition this year. In May, the company agreed to buy Metaco, a Swiss provider of crypto custody services, for $250 million.
A Ripple spokesperson declined to comment on the size of the deal but said that it is less than the sum Ripple paid to buy Metaco. Ripple was a minority investor in Fortress Trust’s seed funding round.
Ripple said the deal would “support our existing lines of business — specifically in terms of improving the customer experience within our payments and liquidity solutions.”
Ripple also obtained a Nevada trust with its acquisition of Fortress Trust, adding to its growing list of regulatory permits globally. A company spokesperson said this would enable the firm to “provide regulated services — for both fiat and crypto — to certain customers in the U.S.”
Ripple already holds a New York BitLicense, which lets it engage in regulated virtual currency activities in the state of New York, as well as 30 money transmitter licenses across the U.S. and an in-principle Major Payment Institution License from the Monetary Authority of Singapore, the country’s central bank. The company told CNBC previously it was also looking to get an e-money license with the Irish central bank.
“Longer term, we anticipate there will be ways we can leverage the technology to support new initiatives on our roadmap and enable Ripple to serve a broader segment of customers and use cases,” a Ripple spokesperson told CNBC via email.
Ripple is one of many players in the so-called “crypto custody” space, meaning it’s focused on helping companies and individual users store their tokens in a secure, decentralized address without requiring all the technical knowhow.
Fortress Trust uses application programming interfaces, or APIs — programs that allow different apps to interact with each other — to allow companies to pull data from other bits of software, such as wallets holding cryptocurrencies and nonfungible tokens.
Per Fortress’s website, the startup works with “crypto exchanges, NFT marketplaces, tokenization platforms, corporate brands, agencies, securities exchanges, real estate, healthcare, neobanks, sports and entertainment celebrities, musicians, influencers and other innovators.”
This article was originally published on CNBC