Banks Could Absorb XRP Costs Under Proposed Ledger Upgrade

A proposed upgrade to the XRP Ledger (XRPL) could allow banks and financial institutions to absorb XRP costs, making it easier for customers to use tokenized assets without holding the token themselves.

The Sponsor amendment would enable a company to pay account reserves and transaction fees on behalf of another XRPL user, while the customer retains control of their account and private keys.

Jazzi Cooper, Ripple's head of product, explained that this feature is designed so a sponsor can cover those costs for users. This could allow consumer-facing applications and institutional platforms to keep the underlying XRP mechanics largely out of the customer experience.

However, the trade-off would move to the sponsor's balance sheet. Account reserves would still need to be covered in XRP, while transaction fees would continue to be paid in the token and destroyed when transactions settle. Businesses could therefore become the XRP holders supporting customers who themselves own none.