A fresh debate has surfaced around the real scale of XRP activity on-chain, despite Ripple's decade-long effort to form ties with over 300 financial institutions. Daily on-chain volume remains far from the billions many expected, prompting Ripple CTO David Schwartz to explain the slowdown in institutional usage of the XRP Ledger (XRPL).
Schwartz addressed the concern directly, noting that many institutions historically chose to use digital assets away from public blockchains due to compliance risks. Financial firms must control counterparties, liquidity sources, and transaction visibility. Open liquidity on a public decentralized exchange creates uncertainty that regulated entities cannot easily accept. Schwartz revealed that even Ripple itself cannot rely on the XRPL DEX for payment flows because liquidity providers' identities cannot always be verified, creating regulatory exposure.
This limitation explains why massive banking partnerships have not translated into billions of dollars moving across XRPL daily. Commentator Archie (Archie_XRPL) argued that the missing ingredient was never speed or settlement efficiency—XRPL already delivers fast, low-cost transfers—but institutional-grade permissioning.
Schwartz pointed to "permissioned domains" as the solution now arriving on XRPL. These domains allow controlled participation inside defined environments on the same ledger, enabling financial institutions to verify liquidity providers and giving regulators clearer oversight. This reduces counterparty risk to levels acceptable for real payment infrastructure. Archie framed this upgrade as the moment infrastructure finally matches Ripple's relationship building, potentially serving as the true starting point for institutional-scale usage.
Concurrently, crypto analyst Jungle Inc highlighted a structural shift in institutional engagement. Ripple Prime has gone live with an integration for Hyperliquid, allowing regulated firms to access decentralized derivatives through established compliance frameworks. This integration introduces cross-margin functionality, letting firms deploy existing assets as collateral across decentralized positions, improving capital efficiency. The analyst described this as Wall Street moving beyond observation to direct interaction with XRP-linked infrastructure, focusing on settlement and collateral efficiency rather than speculative trading.
These developments position XRPL closer to backend financial infrastructure. Bridges like FXRP and Flare enable XRP-based value to flow into decentralized derivatives environments in real-time with improved transparency. This institutional focus emerges as centralized exchanges face scrutiny, with participants prioritizing infrastructure resilience and settlement reliability over short-term price volatility.
