XRP News Today: Banks vs Blockchain: The Trust Gap Blocking XRP’s Rise

Ripple’s XRP token continues to face scrutiny in its efforts to position itself as a viable alternative to traditional banking rails, as concerns grow over its ability to gain institutional trust. Tom Zschach, Chief Innovation Officer at SWIFT, recently argued that banks are unlikely to adopt XRP for settlement, citing its lack of regulatory compliance and its status as a non-deposit asset not controlled by financial institutions [1]. Zschach emphasized that institutions prefer using internal payment systems, tokenized deposits, or regulated stablecoins they already trust, rather than relying on decentralized solutions like XRP [2].

A central issue in the debate is the inefficiencies of the traditional banking system. Banks currently pre-fund trillions of dollars in nostro and vostro accounts to facilitate cross-border transactions, resulting in idle capital that cannot be used productively [1]. Ripple’s XRP, by contrast, operates as a neutral bridge asset, eliminating the need for these pre-funded accounts. Proponents argue that XRP’s decentralized nature allows it to function as a 24/7 settlement layer, offering cost advantages over legacy systems [2]. Some analysts predict that Ripple could capture up to 15% of SWIFT’s market share within five years [1].

Despite these advantages, Zschach has raised legal and regulatory concerns. He noted that while liquidity is a key factor in payment systems, legal enforceability remains a critical barrier. XRP, he argued, is not a regulated form of money and does not sit on banks’ balance sheets, making it an unsuitable solution for final settlement. This criticism has led to broader questions about whether banks would be willing to outsource such critical functions to a third-party blockchain [2]. In response, Ripple has emphasized its long-standing compliance efforts, including the launch of its On-Demand Liquidity (ODL) corridors and the recent introduction of RLUSD, a regulated stablecoin designed to meet institutional requirements [1].

One of the key differentiators of XRP is its ability to operate 24/7/365 without the limitations imposed by traditional banking hours. Unlike tokenized deposits or regulated stablecoins, which often face restrictions outside business hours, XRP enables continuous settlement. This has led to growing support from XRP advocates, who argue that Ripple’s infrastructure provides a real-time, scalable alternative to legacy systems [2]. Critics, however, remain unconvinced. They argue that while XRP may offer operational benefits, it does not solve the issue of institutional governance or legal enforceability [1].

The debate highlights broader tensions between traditional financial institutions and decentralized solutions. While Ripple has secured licenses in key jurisdictions and continues to engage with regulators, the SWIFT-CIO’s comments underscore the reluctance of banks to adopt a settlement mechanism outside their direct control. This resistance may delay or limit Ripple’s ability to gain widespread adoption in the institutional space, even as it continues to demonstrate the technical and financial advantages of its XRP-based model [1].

Source:

[1] End of Road for XRP? Ripple vs SWIFT Debate Escalates on Settlement Rails (https://coingape.com/end-of-road-for-xrp-ripple-vs-swift-debate-escalates-on-settlement-rails/)

[2] SWIFT CIO Claims Banks Will Skip XRP, Favor Internal Rails, Stablecoins (https://www.fxleaders.com/news/2025/09/04/swift-cio-claims-banks-will-skip-xrp-favor-internal-rails-stablecoins/)