Ripple Executive Highlights XRP Ledger’s Fit for Real-World Asset Tokenization
Ripple's Senior VP Markus Infanger states the XRP Ledger (XRPL) is crucial for the next phase of real-world asset (RWA) tokenization, viewing current Special Purpose Vehicles (SPVs) as a transitional model.
Key Points on Transition from SPVs to Native Issuance
- Infanger compares today's SPVs to 1970s immobilization of paper certificates, serving as temporary solutions while regulatory frameworks develop.
- The aim is native issuance, where assets are digital from inception, with compliance enforced by code and seamless liquidity across platforms.
Advantages of XRPL
- On-ledger exchange allows direct trading of tokens without external smart contracts, enhancing efficiency.
- Fast, low-cost settlements cater to high-frequency trading needs, essential for RWAs like tokenized T-bills.
- XLS-30 AMM facilitates continuous pricing in RWA markets through algorithm-driven liquidity pools.
- XLS-65 proposes standardized borrowing and lending mechanisms for greater auditability and risk management.
- Programmable compliance integrates regulatory requirements directly into asset lifecycles.
- Composability allows seamless movement of tokens through various financial processes without relying on disparate systems.
Examples of Native Issuance Initiatives
Infanger highlights a pilot project by Ctrl Alt with Dubai’s land regulator to mint property ownership records on XRPL, aiming for enhanced transfer efficiency and auditability.
Future of SPVs
SPVs will continue to play a role as institutions adapt to existing regulations while transitioning towards fully digital asset solutions. This approach helps onboard capital and shape policy development.
Message to Financial Institutions
Infanger advises banks and asset managers to utilize SPVs presently while considering designs for future native issuance using XRPL's capabilities to streamline operations and enhance asset management.