A Moneygram logo is seen outside a bank in Vienna. Picture: REUTERS / HEINZ-PETER BADER
A Moneygram logo is seen outside a bank in Vienna. Picture: REUTERS / HEINZ-PETER BADER

London — MoneyGram International soared as much as 155% in early trading after a tie-up with blockchain-technology company Ripple. The rally is reminiscent of late 2017, when a wave of small-cap stocks saw valuations multiply as they re-branded as blockchain companies.

The difference is that MoneyGram is an established company with about 2,400 staff and $1.4bn in annual revenue, not a re-branded unprofitable iced tea-maker or a three-man IT firm based out of a business park in Essex, England. Not to mention that Ripple’s deal comes with real money: it invested $30m in shares and warrants and has an option to invest a further $20m.

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Ripple’s investment will see it become MoneyGram’s main partner for cross-border transactions using digital assets, reducing operating costs and working-capital requirements, the company said in a statement on Monday. MoneyGram shares gained at almost 14 times the three-month daily average volume of shares traded, in the first 10 minutes of the market's opening

“The tie-up with MoneyGram and Ripple underscores two key points: first, investment into and from the blockchain and cryptocurrency sector is coming off the sidelines,” said Nigel Green, CEO of independent financial consultancy Devere Group. “Second, the impact of this flow is being welcomed by investors in a broader sense.”

Facebook’s plans for a new currency that it hopes will one day trade on a global scale, much like the US dollar, are further propelling blockchain and cryptocurrencies into the mainstream. Shares of the social-media giant are up 1.4% after it unveiled details of Libra, which will be launched as soon as in 2020.

Bitcoin climbed past $9,000 to its highest since May 2018 on Monday, and traded at about $9,200 as of 11.45am in London on Tuesday. At the same time, prominent Bitcoin bull Thomas Lee said that the digital currency was primed for a “fear of missing out” rally that could see it hit as high as $40,000 within a few months.

Bloomberg