XRP News Today: Ripple CTO Cites Regulatory Barriers to XRPL DEX Adoption

Ripple’s CTO David Schwartz has provided clarity on the limited use of the XRP Ledger (XRPL) decentralized exchange (DEX) for payments, attributing the decision to regulatory and compliance concerns [1]. In a recent public discussion, Schwartz emphasized that the company and its institutional partners are not currently leveraging the XRPL DEX due to the inability to verify liquidity sources, which introduces risks from unregulated or potentially malicious actors [2]. This stance reflects Ripple’s broader approach of prioritizing institutional confidence over immediate on-chain adoption [3].

Schwartz explained that the decentralized nature of the DEX makes it difficult to enforce compliance standards, particularly for regulated entities [4]. The inability to confirm the identity of liquidity providers raises concerns that sanctioned or criminal actors could be involved in transactions, which is unacceptable for institutional-grade operations [2]. As a result, most Ripple clients have opted for off-chain settlement methods, which offer greater control and meet the stringent requirements of global banking systems [5].

The CTO also acknowledged that on-chain activity on XRPL has declined in recent months, with wallet creation and transaction volumes dropping by 30-40% in Q1 2025 [1]. Decentralized finance (DeFi) activity on the ledger has also seen a modest decline, with total value locked (TVL) across platforms amounting to roughly $81 million [5]. Analysts have linked these trends to Ripple’s continued focus on off-chain infrastructure and its reluctance to push for widespread on-chain settlement without enhanced compliance tools [5].

Looking ahead, Schwartz suggested that permissioned domains could serve as a potential solution to these challenges. By allowing only verified participants to contribute liquidity, such controlled environments could reduce compliance risks and improve institutional trust in the XRPL DEX [6]. Until these measures are implemented, however, the DEX remains an underutilized component of the XRP Ledger [3].

Despite the current limitations, Schwartz defended the relevance of XRP as a bridge asset in the evolving stablecoin landscape [7]. He argued that the fragmentation of stablecoin ecosystems across jurisdictions ensures that a globally interoperable token like XRP still plays a critical role in facilitating cross-border transactions and supporting tokenized securities and loan portfolios [8]. Although volatility may be a concern for some, he noted that the potential gains for liquidity providers could outweigh short-term price fluctuations [7].

Ripple’s approach highlights a broader trend in the blockchain industry, where institutions are prioritizing compliance and security over decentralized innovation [1]. While the company remains committed to expanding the capabilities of the XRP Ledger, it has chosen to proceed cautiously, ensuring that regulatory frameworks are in place before fully embracing on-chain solutions [4]. As permissioned domains and institutional-grade controls become more accessible, the XRPL DEX could eventually see greater adoption in mainstream financial applications [6].

Source:

[1] Ripple's Schwartz defends low XRPL volume, says banks settle off-chain – Cointelegraph, https://cointelegraph.com/news/ripple-cto-defends-low-xrpl-volume-says-banks-settle-off-chain

[2] XRP News Today: Ripple CTO Cites Regulatory and ... – AInvest, https://www.ainvest.com/news/xrp-news-today-ripple-cto-cites-regulatory-liquidity-barriers-chain-adoption-2507/

[3] Ripple CTO Admits 'Even Ripple Can't Use XRPL DEX' as ... – The Defiant, https://thedefiant.io/news/blockchains/ripple-cto-admits-even-ripple-can-t-use-xrpl-dex-as-xrp-faces-longtime-fan-s-scrutiny

[4] Ripple CTO Explains Why XRPL DEX Isn't Yet Used for ... – Bitcoin Insider, https://www.bitcoininsider.org/article/281017/ripple-cto-explains-why-xrpl-dex-isnt-yet-used-payments

[5] Ripple CTO David Schwartz addresses concerns over ... – Mitrade, https://www.mitrade.com/insights/news/live-news/article-3-998685-20250731

[6] Ripple CTO Answers Key Question About Bank Partnerships – U.Today, https://u.today/ripple-cto-answers-key-question-about-bank-partnerships

[7] XRP News Today: Ripple CTO Highlights XRPL Liquidity ... – AInvest, https://www.ainvest.com/news/xrp-news-today-ripple-cto-highlights-xrpl-liquidity-challenges-role-xrp-tokenized-finance-2507/

[8] Ripple's Schwartz Defends Low XRPL Volume, Explains ... – Coinstelegram, https://coinstelegram.com/news/ripple_schwartz_defends_low_xrpl_volume_explains_banks_settle_offchain/