Why XRP Is Not Being Used Currently At High Volumes By Banks

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Crypto investor Mr. Man recently provided a detailed explanation addressing one of the most debated topics surrounding XRP — why it is not yet being used at high volumes by banks for cross-border liquidity.

His commentary, supported by remarks from former Ripple managing director Navin Gupta, sheds light on the regulatory and operational barriers currently shaping global financial infrastructure.

Institutions are required to maintain compliance with frameworks that still treat cryptocurrencies as high-risk assets. The Bank for International Settlements (BIS) currently assigns a 1250% risk weight to unbacked crypto assets such as Bitcoin, XRP, and Ethereum. This means banks must allocate substantial capital against any holdings.

The Role of the BIS in Future Crypto Adoption

Mr. Man explained that only when the BIS adjusts this prudential treatment — reducing the risk weighting — will banks begin using digital assets like XRP for liquidity purposes. This change would open the path for financial institutions to use XRP as efficiently as they use the dollar today.

He compared the existing foreign exchange mechanism to the one XRP could replace. Currently, a transaction might move from the British pound to the U.S. dollar, then from the dollar to the Philippine peso. In the future, once regulatory conditions permit, that same transaction could flow from the pound to XRP, and then to the peso, eliminating the need for dollar intermediaries.

RLUSD and Its Relationship with XRP

Mr. Man also clarified a crucial point about Ripple’s stablecoin, RLUSD. He emphasized that RLUSD’s introduction does not reduce XRP’s utility. Instead, XRP functions as the bridge asset that enables the movement of RLUSD and other currencies through Ripple’s software infrastructure.

Navin Gupta Explains XRP’s Practical Application

In the video attached to the tweet, Navin Gupta elaborated on this structure. He described Ripple as a software system connecting order books across different exchanges.

Gupta explained that XRP is freely traded in independent markets — for example, GBP to XRP in the United Kingdom and XRP to the Philippine peso in the Philippines. When a cross-border transaction is initiated, Ripple’s software connects these markets, converting GBP to XRP and then XRP to the peso within seconds.

Gupta stressed that Ripple’s operations involve only regulated financial institutions and that every transaction complies fully with legal standards. He noted that the process replicates traditional currency routes but replaces the dollar bridge with XRP, achieving faster settlement and lower cost.

By connecting Mr. Man’s insights with Gupta’s explanation, the underlying message becomes clear: XRP’s limited institutional adoption is not due to its inefficiency but to global regulatory frameworks that have yet to evolve. Once prudential standards shift, XRP could become the preferred bridge asset for cross-border liquidity.

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