Ripple’s XRP Ledger poised to advance institutional asset tokenisation
Experts are optimistic about Ripple’s (CRYPTO:XRP) XRP Ledger (XRPL) capabilities in the tokenisation of real-world assets (RWA) for institutional use.
With its focus on security, scalability, and interoperability, Ripple aims to position XRPL as a robust platform for decentralised finance (DeFi) and asset management.
Ross Edwards, Senior Director for Solutions and Delivery at Ripple, emphasised that the XRPL is well-suited for bridging traditional finance with DeFi due to its core advantages.
He noted, "The XRP Ledger enables instant settlement of value, together with transparency and auditability that can really change the risk profile of transactions."
The XRPL can settle transactions in just 3 to 5 seconds at minimal cost, offering a significant improvement over traditional financial systems' delays and expenses.
Edwards also pointed out that XRPL's automated market maker (AMM) and forthcoming multi-purpose token (MPT) standard would support institutional liquidity and enhance tokenization efforts.
The AMM is integrated directly into XRPL’s decentralised exchange, allowing institutions to interact with DeFi securely without needing third-party smart contracts.
"It’s natively built for this," Edwards said, referring to XRPL's foundation for holding, trading, and transferring assets securely on-chain.
Moreover, Ripple is set to launch Ripple USD (CRYPTO:RLUSD), a stablecoin pegged to the US dollar, aiming to improve liquidity and facilitate cross-border transactions.
Edwards remarked, “Stablecoins are a must-have in the real-world asset tokenization space,” highlighting the growing importance of stablecoins in both crypto and traditional finance.
To enhance security and regulatory compliance, XRPL integrates Decentralized Identifiers (DIDs), which help institutions manage user identities in line with Know Your Client (KYC) and Anti-Money Laundering (AML) standards.
Markus Infanger, Senior Vice President of RippleX, noted that DIDs make it easier to integrate tokenized RWAs into on-chain financial infrastructure, opening new opportunities for trading, investing, and borrowing.
Despite its promising potential, XRPL faces challenges such as a 65% drop in transaction activity in Q2 2024 compared to Q1.
Edwards acknowledged that tokenization is a gradual process, stating, "Tokenization is not something that can be done instantly. It’s about building the ecosystem and connecting together these value chains."
He stressed the importance of balancing short-term gains with long-term growth to ensure that financial institutions remain engaged in this evolving landscape.
At the time of reporting, the XRP price was $0.5392.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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