XRP News Today: ECB Tests XRP Ledger for Tokenized Bond Issuance in Wholesale DLT Sandbox

The European Central Bank (ECB) recently conducted a trial using the XRP Ledger code within a private, permissioned network. The trial focused on testing the mechanics of tokenized bond issuance, settlement, and redemption. The project was part of the ECB's wholesale-DLT sandbox and was led by Lithuanian fintech company Axiology. Axiology's Distributed Ledger Technology (DLT) Trading and Settlement System recorded delivery-versus-payment using escrow wallets and XRP payment transactions for bond operations.

The trial involved three key steps: issuance, coupon payment, and redemption. Initially, the issuer's node sent tokens to an escrow wallet via an XRP payment transaction. Subsequently, an operator moved tokens from escrow to the investor's wallet, completing the delivery-versus-payment process. For redemption, investors returned tokens to escrow, and operators burned them once funds were returned to the issuer's account. The Banque de France’s Trigger Solution managed central-bank euros, ensuring that digital assets and cash legs operated in parallel within closed ledgers.

Axiology's system, built using the open-source code of the XRP Ledger, operated independently and did not interact with public validators. The ECB noted that Axiology’s system is standalone, recording trades, settlements, and custody of tokenized bonds without touching public validators. The trial aimed to measure the speed and reliability of the XRP-based code compared to systems built on Corda, Canton, and Ethereum variants. The findings from this trial will inform the ECB's future design of wholesale Central Bank Digital Currency (CBDC).

While the trial demonstrated the usability of Ripple’s technology within a sandbox environment, public networks remain off-limits. This trial marks a significant test for Ripple’s technology, but its broader adoption is still uncertain. The ECB's trial highlights the potential of tokenized asset settlement using the XRP Ledger, but it also underscores the regulatory and technical challenges that need to be addressed for wider implementation.