Banks Expand Blockchain Networks, Testing XRP's Position as Settlement Asset

XRP's recent surge has come to an end, at least for now. The token has pulled back after a 49.4% jump over the past week, according to Cryptopolitan. This reversal is being driven by banks expanding their own blockchain-based systems that can process cross-border payments without using XRP.

For example, JPMorgan's in-house blockchain platform, Kinexys, allows companies to make cross-border payments without buying a separate cryptocurrency as an intermediary asset. If a company holding dollars needs to pay in yen, it can exchange the currencies within JPMorgan's system and leave the settlement record on the blockchain.

Citigroup is also moving in this direction, combining its 24-hour U.S. dollar clearing network with tokenised commercial bank deposits to speed up overseas payments while reducing the burden of pre-funding. Tokenised deposits issued by banks are tied to the issuing bank's ecosystem and can be exchanged between different currencies without using a common cryptocurrency like XRP.

Swift is also working on a method that links digital deposits issued by each bank, rather than relying on a single cryptocurrency. HSBC and Standard Chartered recently completed the first cross-border transaction using Swift's blockchain ledger, which uses messaging and settlement coordination to facilitate transactions between banks with different deposit tokens.