Ripple Co-Founder Addresses Why Banks Hesitate to Adopt XRP Ledger
The Banking Paradox: 300 Partners But Minimal On-Chain Activity
Ripple co-founder David Schwartz recently responded to community concerns about the limited on-chain activity from the company's 300+ bank partners, despite XRP Ledger's (XRPL) technical capabilities for cross-border settlements. The explanation reveals fundamental institutional hesitations about public blockchain adoption.
Key Reasons Banks Avoid On-Chain XRP Transactions
Control vs. Decentralization Dilemma
Banks require compliance certainty for audit trails, sanctions screening, and transaction reversibility
Public ledgers delegate validation to anonymous nodes—a non-starter for regulated entities
Sanctions Compliance Risks
Schwartz admitted even Ripple can't use XRPL's DEX due to OFAC sanctions uncertainty
"We can’t be sure a terrorist won’t provide the liquidity" – highlighting AML/CFT challenges
Preference for Private Infrastructure
Most partners use RippleNet's off-chain messaging (like SWIFT) while settling via traditional rails
Institutions favor permissioned chains (e.g., JPM Coin) over public ledgers
Schwartz's Optimistic Outlook
While acknowledging slow adoption, Schwartz noted growing institutional interest in hybrid solutions:
Regulated DeFi frameworks gaining traction
CBDC interoperability pilots using XRPL (e.g., Palau, Montenegro)
2025 upgrades enabling compliance-friendly smart contracts
Community Reaction
The explanation disappointed #XRPArmy members who long promoted XRPL as "the most bank-friendly blockchain." Critics argue Ripple's 13-year focus on banks yielded minimal on-chain utility, with:
Daily XRP volume: ~$1.2B (vs. $25B for USDC)
XRPL DEX TVL: Just $85M (per DefiLlama)
What’s Next?
Ripple’s Q3 roadmap emphasizes:
✓ Enterprise-grade privacy features
✓ OFAC-compliant liquidity pools
✓ FedNow integration trials
"The gap isn’t technological—it’s about meeting regulatory guardrails without sacrificing blockchain’s value proposition."
#ripple #bank #xrp