XRP Update: SWIFT Advocates for Collaborative Governance in Blockchain Technology
SWIFT, a prominent global financial messaging network, has reiterated concerns regarding the adoption of the XRP Ledger by traditional financial institutions. Tom Zschach, SWIFT’s Chief Innovation Officer, has emphasized the importance of neutral, shared governance infrastructure over platforms that are controlled by corporations. Zschach pointed out that true resilience is not just about surviving legal challenges but about having a decentralized governance structure that involves multiple industry stakeholders, ensuring compliance with standardized frameworks.
This perspective from SWIFT aligns with the larger trend in institutional blockchain adoption, where traditional finance leans towards platforms such as Circle’s USDC and stablecoins built on Ethereum due to their scalability and compliance with evolving global standards. In contrast, the XRP Ledger (XRPL) has encountered challenges, as evidenced by its lagging DeFi metrics, including total value locked (TVL) and decentralized exchange volume. According to DeFiLlama, the TVL on XRPL is currently at $87.85 million, significantly lower than Ethereum’s $96.9 billion and Solana’s $11.27 billion, indicating a widening gap in network effects and developer activity.
To address these challenges, Ripple, the company behind XRP Ledger, has introduced several initiatives aimed at revitalizing the platform. These efforts include the launch of Automated Market Makers (AMMs) with new liquidity pools, the creation of a stablecoin called RLUSD, and the integration of a native USDC on the XRP Ledger. Ripple has also developed an EVM sidechain to enhance Ethereum compatibility, with the goal of attracting developers and institutional users. The importance of building an active ecosystem is highlighted by Adam Kagy, co-founder of an NFT marketplace, who emphasizes that enterprises are unlikely to engage with networks that lack retail participation or on-chain activity.
While the potential integration of XRP Ledger with SWIFT’s messaging infrastructure remains uncertain, SWIFT has conducted trials using XRP Ledger and Hedera Hashgraph to test their compatibility with conventional banking systems under the ISO 20022 standard, set to become mandatory in 2025. Ripple CEO Brad Garlinghouse has suggested that if XRP were to capture just 1% of SWIFT’s $150 trillion in annual transactions, it could generate $1.5 trillion in demand for the asset. However, concrete partnerships between Ripple and SWIFT have yet to materialize, as SWIFT continues to advocate for infrastructure that avoids corporate dominance and instead opts for governance models where industry stakeholders collectively manage the system.
The ongoing debate surrounding XRP Ledger reflects a wider divide in the financial technology space between corporate-driven innovation and industry-wide governance models. Ripple’s efforts to position XRP as a key player in institutional settlements face significant hurdles in competing with Ethereum and Solana, as well as in convincing traditional financial institutions to rely on a single entity’s rails for cross-border transactions. Despite the potential benefits of blockchain technology, there is still a preference in traditional finance for governance systems that prioritize privacy, enforceability, and regulatory alignment within the global financial landscape.
