Vandell Aljarrah, co-founder of Black Swan Capitalist, recently sparked discussion across the digital asset space with a provocative proposal: the issuance of U.S. government bonds backed by XRP. Shared on X, Aljarrah’s idea centers on replacing conventional Treasury securities with debt instruments denominated in XRP.
Under his proposal, the U.S. government would sell XRP directly to investors, who would receive fixed returns, such as 2% annually, in either XRP or U.S. dollars. At maturity, holders would redeem the XRP for its market value, functioning similarly to traditional bonds.
While this concept aligns with the growing trend of blockchain integration into financial infrastructure, several substantial barriers stand in the way of implementation.
XRP-backed bonds.
Imagine the U.S. government issuing XRP as a debt instrument instead of bonds. Investors buy XRP from the Treasury & earn a yield, just like with government bonds, but in a digital format.
For example a fixed yield (e.g., 2% annually paid in USD or XRP) &…
— Vandell | Black Swan Capitalist (@vandell33) May 2, 2025
Key Obstacles Facing XRP-Linked Bonds
One of the foremost challenges to XRP-denominated sovereign debt is the issue of price stability. Unlike fiat currencies used in government bond markets, cryptocurrencies like XRP are highly volatile. For XRP to be viable as a debt instrument, significant progress would be required in reducing price fluctuations or implementing a stabilizing mechanism similar to those employed by stablecoins.
Another major consideration is the regulatory landscape. At present, XRP is not classified as a reserve asset under U.S. law, and the Securities and Exchange Commission (SEC) has historically maintained a cautious stance toward digital assets. Despite evolving attitudes within the government and increasing legislative efforts aimed at defining cryptocurrencies, issuing bonds backed by XRP would likely require comprehensive regulatory reform and a formal reclassification of the asset.
At the state level, some progress has been made toward embracing cryptocurrencies in public finance. For instance, New Hampshire has passed legislation allowing treasury investments in digital assets, although the threshold is currently limited to cryptocurrencies with market caps exceeding $500 billion, a benchmark XRP has not yet met, while Bitcoin qualifies.
Beyond these technical and regulatory issues, the financial system itself presents a structural challenge. Aljarrah himself acknowledged that a severe disruption in the traditional debt market, such as a widespread crisis or erosion of confidence in Treasury securities, might be necessary before alternative frameworks like XRP-backed bonds are seriously considered.
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Broader Context: Blockchain in Sovereign Debt
While the idea of XRP-backed bonds remains speculative, blockchain-based government debt instruments are already beginning to take shape globally. El Salvador, for example, has explored issuing bonds using Bitcoin as the underlying asset. This reflects a broader trend in the digital finance sector: the tokenization of real-world assets (RWAs), which is increasingly viewed as a viable pathway for integrating blockchain technology into mainstream finance.
Bitcoin-Based Proposals Gain Traction
In contrast to XRP, Bitcoin has already been featured in bond-related proposals at the institutional level. During the recent Bitcoin For America summit, Andrew Hohns, CEO of Newmarket Capital, advocated for the U.S. government to issue $2 trillion in bonds, with 10% of that value allocated to Bitcoin. According to Hohns, this strategy, offering a 1% interest rate compared to the standard 4.5% on Treasury bonds, could reduce national debt service costs by $70 billion annually.
Similarly, VanEck’s Matthew Sigel has suggested leveraging Bitcoin to help refinance $14 trillion of U.S. debt, signaling growing acceptance of digital assets in fiscal planning.
Although Aljarrah’s idea of XRP-backed government bonds is currently more conceptual than practical, it contributes to a larger conversation about the role of blockchain in reshaping public finance. For now, significant volatility, legal uncertainty, and structural inertia limit the feasibility of such instruments. However, the continued exploration of tokenized debt by governments and institutions alike suggests that digital assets may play a growing role in sovereign finance in the years ahead.
Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.
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