Crypto researcher SMQKE has shared a compelling post highlighting XRP’s evolving function within institutional finance. The post outlines how the digital asset is becoming increasingly positioned as a viable liquidity solution for cross-border transactions, particularly as regulatory frameworks shift in favor of digital asset adoption by banks.
According to SMQKE, XRP’s price volatility is expected to decline as institutional use grows, particularly through its role as a bridge currency. This development stems from the increasing demand tied to real-world utility, which brings more predictable and consistent market activity.
The concept, supported by previously published materials from Ripple, shows that XRP’s use in cross-border payments enables institutions to bypass the need for pre-funded nostro accounts. In turn, this reduces friction, settlement delays, and costs — factors that enhance liquidity access on demand.
XRP will become less volatile as demand stabilizes through its use as a bridge currency for institutional payments and cross-border flows.💯
Once banks are permitted to hold XRP on their balance sheets — a move that documentation shows can stabilize prices at higher levels — its… https://t.co/aNZC1cOn7a pic.twitter.com/kFyhqUssMn
— SMQKE (@SMQKEDQG) April 22, 2025
Balance Sheet Integration and Liquidity Utility
Documents referenced in the tweet and attached images emphasize that Ripple’s infrastructure allows banks to leverage XRP as a bridging mechanism between fiat currencies. The cost-saving potential stems from reduced spreads in foreign exchange, minimized liquidity constraints, and streamlined treasury operations.
A specific segment notes that the operational model assumes banks hold XRP on their balance sheets to facilitate liquidity for transactions, independently or with third-party market makers. This scenario stabilizes demand and, by extension, XRP’s price over time.
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Basel III Considerations and Dead Capital Reduction
Further reinforcing this narrative, an excerpt titled “Teleporting Gold” details Ripple’s intention to resolve banks’ liquidity limitations by introducing a more dynamic, on-demand liquidity mechanism via XRP.
The excerpt points out the inefficiency of dormant cash reserves under the Basel III framework, where banks must maintain costly balance sheet assets to meet liquidity coverage requirements.
When XRP is integrated into bank systems and actively used for payments, it transforms from a speculative asset into a functional, high-turnover tool that helps institutions meet compliance goals while improving capital efficiency.
Regulatory Shifts Under New SEC Leadership
SMQKE also noted a pivotal regulatory development: Paul Atkins’s swearing-in as Chair of the Securities and Exchange Commission. With his appointment, momentum is reportedly building for regulatory clarity concerning the classification of digital assets on bank balance sheets.
This is especially relevant for assets like XRP, whose integration into financial institutions’ operations hinges on clear regulatory guidelines. As regulations evolve to accommodate tokenized assets in traditional banking frameworks, XRP stands to benefit due to its established infrastructure and documented utility in institutional payments.
With documented models showing XRP’s utility in cross-border settlements and a regulatory environment shifting toward digital asset inclusion, XRP’s prospects in global finance continue to strengthen.
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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