Recent statements from Ripple's CTO David Schwartz have sparked lively discussions in the cryptocurrency community. He acknowledged that Ripple and its partners are not yet using the XRP Ledger decentralized exchange for payments, raising questions about compliance and liquidity.
Compliance Concerns
Schwartz noted that the main reason Ripple does not use the XRPL DEX for payments is regulatory compliance issues. He mentioned that Ripple has no control over who provides liquidity on the DEX, which opens possibilities for criminal engagement.
> "We cannot guarantee that a terrorist or sanctioned entity hasn’t supplied liquidity, and that level of uncertainty isn’t acceptable for regulated institutions,"
- he said.
Decline in On-Chain Activity
Recent estimates show that XRPL on-chain metrics have decreased, with wallet generation and transaction volumes drop by 30-40% in the first quarter of 2025. Meanwhile, decentralized finance (DeFi) activity on the ledger has also decreased slightly, demonstrating around $81 million in total locked value across platforms. Schwartz defended Ripple's stance, emphasizing that most institutional business continues through private, secure channels.
XRP as a Bridge Asset
The discussion around XRPL DEX utilization is also relevant to the emerging role of XRP as a bridge asset. Schwartz stated that, despite the emergence of stablecoins, a global, interoperable asset like XRP remains necessary.
> "The fragmented nature of stablecoins across different jurisdictions keeps XRP’s role as a bridge currency relevant," he said. He also noted that volatility is not necessarily a downside, as potential benefits often outweigh short-term fluctuations for liquidity providers.
The debate around Ripple's decision not to utilize the XRPL DEX underscores the crypto industry's contradiction between innovation and compliance. While the decentralized exchange remains an important aspect of the XRP Ledger, Ripple is stressing institutional confidence and regulatory compliance. The company's strategy reflects a broader trend in blockchain adoption where institutions prioritize safe, compliant solutions before fully engaging in on-chain activities.
