Ripple's Chief Technical Officer Discusses the Limited Capacity of the XRP Ledger, Despite Boasting Over 300 Bank Partnerships
The digital asset XRP is making strides in the world of finance, positioning itself as a potential challenger to stablecoins in certain use cases as a bridge. This growth is being driven by significant institutional adoption, bolstered by increasing legal clarity, promising regulatory developments, and expanding on-chain usage.
Despite geopolitical and regulatory ambiguities that still temper full-scale adoption, the landscape is shifting. The approaching approval of multiple XRP exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) in Q4 2025 is a key indicator of this progress. With a 95% approval probability, this move is expected to provide traditional investors with more regulated access to XRP, boosting institutional confidence.
On-chain usage is also expanding as institutional participation surges. Advanced analysis tools have flagged substantial trading volumes, such as a recent increase to 73.86 million XRP, pointing to massive institutional inflows.
Ripple's partnerships and integration in cross-border payment systems continue to underscore XRP's functional utility in traditional finance. However, it's worth noting that more than 300 banks collaborate with Ripple, but the majority of the activity remains off-chain.
Volatility, a characteristic of XRP, allows for narrower spreads and good trades for users. Banks involved in seconds-long transactions using XRP have little to worry about due to its volatility, as it can increase liquidity within cross-border flows, according to Ripple's Chief Technology Officer, David Schwartz.
Regulatory ambiguity continues to be a challenge to adoption in institutions. However, recent policy shifts, especially under SEC Chair Paul Atkins who favours crypto-friendly regulation, signal improved regulatory trust for XRP, indirectly fostering institutional adoption.
If geopolitical barriers are removed, Ripple could access settlements of billions in volume per day. The XRPL architecture, being unbiased and without central de facto control, is a strength and is attractive to states cautious of U.S. centric networks.
The cross-border payment feature of XRP, combining speed, volatility, and low costs, gives it a competitive advantage. The case for strategic use of XRP volatility gets stronger due to regulatory ambiguity and geopolitical barriers to adoption.
It's important to note that numerous banks prefer to settle through custodial/licensed gateways to avoid internal department risks. The XRP ledger, with its potential for jurisdictional validators spanning continents, could help address this concern.
A 2023 Bank for International Settlements (BIS) report confirms that volatile assets can aid in multi-currency settlement if management is proper. Meanwhile, a Council on Foreign Relations report indicates that residents of the Middle East are suspicious of U.S.-based chains, particularly fearing sanction power or politics.
In conclusion, the current status of XRP's institutional adoption reflects a momentum-building phase, with unresolved but narrowing regulatory ambiguity, growing on-chain and market usage, and evolving geopolitical trust shaped by national stances on cryptocurrencies and regulation. The final resolution of the SEC lawsuit and imminent ETF approvals will likely mark a major step towards broader institutional acceptance.
- The growth of XRP in the world of finance is being driven by significant institutional adoption, expanding on-chain usage, and promising regulatory developments, such as the approaching approval of multiple XRP exchange-traded funds (ETFs).
- Despite regulatory ambiguities, Ripple's partnerships and integration in cross-border payment systems position XRP as a competitive option for volatility-based multi-currency settlements, addressing concerns of banks settling through licensed gateways.
- If geopolitical barriers are removed, the XRPL architecture, being unbiased and without central de facto control, could be attractive to states cautious of U.S. centric networks, potentially enabling settlements of billions in volume per day.
- With the SEC lawsuit final resolution and imminent ETF approvals, key indicators of XRP's progress, the final stage towards broader institutional acceptance could be marked, given the momentum-building phase of its institutional adoption, unresolved but narrowing regulatory ambiguity, and growing on-chain and market usage.
