XRP News Today: Ripple CTO Cites Regulatory and Liquidity Barriers to On-Chain Adoption

Ripple’s Chief Technology Officer, David Schwartz, has provided clarity on the limited use of the XRP Ledger (XRPL) Decentralized Exchange (DEX) for on-chain payments, despite the firm’s collaboration with over 300 financial institutions. In public statements, Schwartz outlined regulatory, liquidity, and reputational concerns as key barriers to broader adoption. These factors have led to a preference for off-chain solutions among institutions seeking greater control and compliance assurance [1].

Schwartz emphasized that Ripple itself does not currently utilize the XRPL DEX for payments, citing the potential risk of unverified liquidity providers—such as a “terrorist providing liquidity for a payment”—as a critical issue. This reflects a broader institutional hesitation to embrace on-chain transactions, where the anonymity of participants and the absence of standardized verification mechanisms pose significant challenges [1].

While the XRPL DEX is technologically capable, its underutilization for high-value transactions highlights a mismatch between innovation and regulatory expectations. Institutions are still prioritizing traditional methods for digital asset settlements, which offer perceived reliability and control. According to Schwartz, the lack of clarity around regulatory compliance, coupled with the potential for misuse, continues to deter widespread on-chain activity [1].

Despite these challenges, Schwartz defended XRP’s role as a bridge asset in cross-border transactions, noting that its volatility is not an obstacle but rather a feature that encourages long-term holding. He contrasted this with stablecoins, acknowledging their potential to displace bridge assets if one dominates the market. However, he argued that the jurisdictional and currency-specific limitations of stablecoins make such a monopoly unlikely [1].

Addressing geopolitical concerns, Schwartz noted that while the XRPL itself is neutral, Ripple’s U.S.-based operations and global licensing structure can create adoption hurdles in certain regions. He acknowledged the impact of international sanctions and regulatory scrutiny but highlighted the company’s efforts to build trust in markets open to its technology. “We build trust and we make hay where the sun shines,” he remarked, underscoring a pragmatic approach to market expansion [1].

The CTO’s remarks point to a strategic focus on developing permissioned solutions that could improve compliance and reduce reputational risks, potentially easing institutional adoption of the XRPL DEX. By prioritizing open, liquid networks over proprietary chains, Ripple aims to position XRP as a foundational asset for global settlements and tokenized securities [1].

Schwartz also noted that historical trends show institutions have long preferred off-chain mechanisms due to existing KYC/AML requirements. However, he suggested that recent developments in permissioned infrastructure could signal a turning point. “Institutions have historically preferred to use digital assets off-chain rather than on-chain. I think we’re close to changing that because institutions are starting to see the benefits of moving on-chain,” he stated [1].

Source: [1] Ripple CTO Explains Why Billions Not Moving On XRP Ledger Yet Despite Partnerships with 300+ Banks (https://coinmarketcap.com/community/articles/688a0a60b68c6f644094b42d/)