by Jake ClaverRipple Doubles Down on XRP Strategy
During XRP Community Day, Ripple’s leadership made several significant statements about the company’s direction. Brad Garlinghouse reiterated that XRP is at the core of what Ripple does and that they are advocates for the token network. Everything they’re building is designed to garner adoption for the blockchain in an institutional manner for enterprises, markets, and real world assets.
Monica Long went further, stating her belief that 2026 will bring institutional adoption at scale for the XRPL and XRP. She said we should revisit that prediction on December 31st of this year. If they’re on track to achieve institutional adoption at scale, that means substantial volume and significantly higher prices are necessary to facilitate that level of activity.
RLUSD as the Gateway Drug
Jack McDonald and Lauren discussed how Ripple is utilizing RLUSD across multiple use cases: payment flows, treasury management, prime brokerage, and as pristine collateral with Ripple Prime. Right now, RLUSD is seeing the most traction among institutions, which makes sense as the stable coin division’s primary focus.
The stable coin acts as a gateway for broader adoption of the asset class. Ripple is already working to pilot multiple other stable coins in different currencies and jurisdictions. The recent Xan Bank announcement for an AED stable coin backed by UAE bonds and treasuries demonstrates this multi-currency approach.
There’s a synergistic relationship between RLUSD and XRP. It’s an infinite feedback loop where they work together to settle value and payments. Ripple issues RLUSD on ecosystems that are adopting XRP as collateral or using it in some capacity in DeFi. They just launched on several L2s on Ethereum, including Arbitrum and other networks.
Why Banks Want This Technology
David Schwartz explained how excited banks and institutions are to reduce costs using this technology. Banks don’t care about the philosophical aspects of blockchain. They care about making more money. Any way they can cut costs, increase efficiency, and clip more basis points is appealing to them.
Consider how much time money sits idle. We have President’s Day this week. Money can’t move. Over weekends, money sits idle. There are 10 bank holidays per year. Add 52 weeks times 2 days per weekend, and you get 104 days plus 10 holidays, which equals 114 days where money isn’t working. Factor in evening downtime, and you’re looking at roughly two-fifths of the year where capital generates no revenue.
If banks could operate 24/7/365 without money sitting idle, they would jump at that opportunity. Using the XRPL and XRP allows them to do exactly that. They can make payments, clip additional yield, and keep capital working constantly. That’s the value proposition institutions see.
The Volatility Problem and Its Solution
David Schwartz identified the two main obstacles to XRP adoption: regulatory uncertainty and volatility. Even when some institutions are okay with volatility at small scales, banks simply won’t hold a volatile asset at scale. They’re working on solutions to hedge that volatility or only have institutions hold XRP for short periods when making payments, like with ODL.
The solution to volatility is liquidity. XRP will operate very similar to an index on the stock market. It takes billions of dollars in inflows or outflows to move an index by a quarter basis point. They’re very stable once there’s enough liquidity in an asset or market. The more liquidity in XRP, the higher the price, and the more stable that value becomes. That stability leads to more institutional adoption.
With regulatory clarity from the Genius Act and likely the Clarity Act in 2026, the adoption rate changes dramatically. These are the two components needed: regulatory clarity and sufficient liquidity at a high price point.
Historic Low Sentiment Meets All-Time High Fundamentals
The Bitcoin fear and greed index sits at five. Five. This is the lowest sentiment level ever recorded. Google Analytics for people searching crypto right now shows lower interest than after the Terra Luna crash, FTX collapse, Voyager, and Celsius in 2021 and 2022. It’s obliterated.
If you’re still here, you’re buying or holding at a time where sentiment is completely opposite of fundamentals. Institutions are leaning in. At the Onondo Summit in New York last week, every large institution was there: Franklin Templeton, Citi, Goldman, BNY. They were all discussing how they’re going to leverage this technology inside their own infrastructure and how it will change markets in 2026.
Yet people are scared. People are fearful. Prices are way down. Warren Buffett’s famous quote applies perfectly here: “Be greedy when others are fearful and be fearful when others are greedy.” There has never been more fear. We are literally at the lowest point ever in the market for fear right now.
Backend Settlement Must Come First
Paul Atkins discussed the tokenization of the back end of the stock market on a news network earlier this week. He said we’re right on the cusp of that taking place. Backend settlement will happen before they tokenize stocks. You need instant settlement, T+0 versus the current T+1, between clearing houses and brokers before implementing tokenization of the stock market.
They said they would tokenize the stock market in the latter half of this year, after Q2. Hopefully the Clarity Act passes by then. Robinhood is creating their own blockchain to tokenize stocks on their exchange. NASDAQ, NYSE, and the new Texas Stock Exchange are all leaning in. The Texas Stock Exchange launched this year and will do ETFs first, then move to tokenized stocks in Q4.
First order of business is backend settlement and real-time clearing for the DTCC. That might coincide with significant price appreciation on certain assets that people hold.
Permission DEX Goes Live February 18th
In just seven days, permission DEX launches on the XRPL. This is the last piece of the puzzle for Ripple to really get institutional adoption for the payment component leveraging XRP to settle transactions. The XRPL already has digital identity credentials and permission domains. Permission DEX completes the functionality required for institutional adoption.
Corda can already leverage XRP to settle between siloed ecosystems using the Corda Settler. That’s what Project Ion was about, the partnership between the DTCC and R3 finalized in 2022 before XRP had clarity here in the US. If there’s enough liquidity in XRP, we could potentially see them start leveraging it to achieve everything we want to happen.
Why XRP Will Appreciate Before the Clarity Act
XRP has a moat right now. It’s the only asset uniquely positioned to facilitate the volume of payments required for certain markets prior to the Clarity Act passing. It’s the only blockchain with the functionality that allows for institutional adoption with digital identity credentials, permission domains, and soon permission DEX.
If Ripple continues pushing forward, XRP might appreciate right before the Clarity Act passes, and then that legislation would pour gas on the fire. The same applies to permission DEX. XRP already has clarity in the US. It’s listed on exchanges as a commodity. There’s significant traction from Ripple’s acquisitions for enterprise-scale adoption.
The Clarity Act faces challenges. The markup passed, but no Democrats voted for it. If we reach midterms and Democrats take control of the House or Senate, we might not see the Clarity Act this year. They may strip out the DeFi component, which is the main source of Democratic opposition, and pass a separate bill for DeFi later.
Lending on the XRPL
David Schwartz discussed how traditional lending components happen off-chain. Only the facilitation of the credit transfer, the debit and credit, happens on the XRPL. Institutions will always underwrite risk on loans. They look at credit scores, income, and all the traditional metrics before issuing credit, whether it’s a mortgage, car loan, or line of credit.
You can already put up collateral on-chain and borrow against it. The next evolution involves token value issued against portfolios of loans. You’ll be able to participate and put your liquidity to work in one of those portfolios on-chain. Because it’s native to the network, there’s no single counterparty controlling it.
Four components will be involved: the lender, the borrower, a broker who does underwriting and oversight, and an arbiter for disputes. Much of this happens off-chain, with only the credit facilitation occurring on-chain. There’s no counterparty risk or centralized authority managing the ecosystem. The people contributing to the pool earn returns based on the lending rate.
Stable Coins Drive Treasury Demand
People often ask why they should care about stable coins when they don’t go up or down to make money. The answer is that stable coins add liquidity to the ecosystem through stability. Banks and enterprises won’t hold volatile cryptocurrencies, but they will hold stable coins.
There’s another piece most people miss: stable coins drive domestic demand for US treasuries. The rest of the world is selling off US debt. Russia and China have already sold the majority of their US treasury holdings. The European Union, the largest holder at about two trillion, and Japan are starting to delever.
For the world to progress to a multipolar system, there needs to be domestic demand for treasuries. The Genius Act creates real institutional demand domestically for treasuries and US debt. That’s good for the economy because treasuries are the bedrock and backbone of the financial system as it exists today. Stable coins provide a transition mechanism while the system evolves.
Tokenized Deposits vs Stable Coins
Banks are definitely going to tokenize deposits, and they’ll be able to pay yield on those. They won’t be able to pass yield to holders of stable coins under current regulations, though Coinbase is trying to change that in the Clarity Act.
Stable coins will primarily be used by institutions for their own internal settlement. Citi will have their stable coin. Goldman will have theirs. Bank of America and JP Morgan have their own. These banks don’t want to hold a counterparty’s stable coin because they’d rather issue their own and hold the treasuries to generate yield themselves. There’s inherent value in holding your own stable coins over somebody else’s.
Tokenized deposits are different. You’ll be able to swap between a money market and your tokenized deposit or earn yield on your tokenized deposit at the bank. If banks can earn two-fifths more money on your money than they do today, they’ll be much more willing to pay out yield to aggregate more capital.
The Path to Three-Digit XRP
XRP needs to reach around $100 before Swift and other major players can really utilize the asset and settle through it. At that price point, there will be enough liquidity for them to operate at scale. You can’t have institutional adoption with $7 or $20 XRP. It won’t be usable with less liquidity than that.
The more volatile the asset is, the less likely institutions and enterprises will adopt it. It needs to be a high, stable value to get the traction and adoption required. Ripple is advocating for this. Companies like Evernym and R3 are advocating for adoption of this asset with the institutions and enterprises they work with.
These institutions want to use XRP because it reduces costs, reduces friction, and allows them to make more money. That will only happen if we see three-digit plus XRP. The ETFs, high demand, exchanges going illiquid, and Tether depegging will all cause significant demand for XRP and drive the price up.