XRP News Today: Ripple CTO Cites Regulation and Liquidity Risks as XRP Ledger Struggles to Attract Institutional Flow

Ripple’s Chief Technology Officer, David Schwartz, has provided a detailed analysis of the ongoing challenges preventing widespread institutional adoption of the XRP Ledger (XRPL). Despite Ripple’s partnerships with over 300 banks and financial institutions, the on-chain volume of XRP transactions remains subdued. Schwartz attributed this to regulatory constraints, institutional caution, and liquidity risks associated with unverified counterparties, particularly in decentralized exchange environments [1].

A key concern raised by investors, including YouTuber Andrei Jikh, revolves around XRP’s real-world utility and its performance against stablecoins. In response, Schwartz argued that XRP’s volatility is not a limitation but rather a strategic advantage in certain use cases. As a bridge currency, XRP’s value lies in its liquidity and ability to connect multiple assets in a decentralized and jurisdiction-neutral manner. This, he emphasized, is a distinct advantage over stablecoins, which are often tied to specific fiat currencies and regulatory regimes [1].

Schwartz also highlighted the importance of liquidity and openness in driving institutional adoption. He questioned the logic of stablecoin issuers like Circle launching their own proprietary blockchains, suggesting that liquidity thrives on accessible, open networks rather than isolated systems. To address institutional concerns, Ripple is developing features such as permissioned domains, which will enable compliant institutions to transact with verified participants on-chain while maintaining the transparency and openness of the ledger [1].

Regulatory and geopolitical challenges remain significant hurdles. Although the XRP Ledger is globally accessible and neutral in design, Ripple’s U.S.-based operations and licensing restrictions limit its utility in certain markets. Schwartz acknowledged these constraints but emphasized the company’s focus on building trust through compliance and transparency, particularly in markets where its presence is strong [1].

Schwartz’s comments reflect Ripple’s strategic vision for the XRP Ledger as a global settlement infrastructure. By addressing institutional concerns and continuing to innovate, the company aims to enhance the on-chain utility of XRP and position it as a viable alternative to traditional and proprietary systems [1].

Source: [1] Ripple CTO Explains Why Billions Not Moving On XRP Ledger Yet Despite Partnerships with 300+ Banks (https://www.ainvest.com/news/xrp-news-today-ripple-cto-highlights-institutional-caution-regulatory-hurdles-market-dynamics-xrp-ledger-growth-challenges-2507/)