Ripple's XRP Credit Plan Aims to Lock Up Coins and Boost Price

Ripple, the cross-border payment network, plans to introduce a credit service in 2027 that uses XRP as collateral for payment loans. This new service will primarily serve Ripple's payment customers, particularly money transfer companies that often require short-term cash to make payments before their own funds arrive.

Under this plan, XRP will be placed in lending pools to back the loans that facilitate these payments. Ripple's President, Monica Long, mentioned that tokenized funds could ensure '24-hour collateral access and real-time borrowing.'

Ripple is aiming to integrate its services, connecting 'payments, credit, the XRP Ledger, and lending protocols.' However, the company has provided no specifics on the size of the lending pools, the identities of potential lenders, or any dates beyond 2027. Additionally, Ripple has yet to disclose the interest rates that borrowers will pay or the currencies in which repayments will occur.

Using XRP as collateral locks up coins, unlike standard payment scenarios where XRP is passed through quickly without being held long-term. If lending activity increases, more XRP would be taken off the market for extended periods, which could create more sustained demand and potentially increase its price.