XRP News Today: BIS Risk Weighting Limits XRP's Function in Bank Liquidity

According to crypto investor Mr. Man and former Ripple managing director Navin Gupta, as cited by

, banks are not utilizing XRP—the digital currency created by Ripple—for cross-border liquidity in significant amounts. This reluctance is attributed more to regulatory barriers than to technological shortcomings. The main reason for banks’ hesitation to embrace widely is that the U.S. dollar continues to serve as the dominant, regulated bridge currency in global currency exchanges. Regulatory standards, especially those set by the Bank for International Settlements (BIS), impose a 1250% risk weighting on unbacked cryptocurrencies like XRP. This means financial institutions must allocate a large amount of capital to hold such assets, as noted by . Such strict capital requirements make it economically challenging for banks to use XRP for liquidity.

Mr. Man pointed out that for XRP to become a viable bridge asset, the BIS would need to lower the risk weighting assigned to crypto assets. He described a possible scenario where, instead of converting British pounds to U.S. dollars and then to Philippine pesos, banks could eventually exchange pounds directly for XRP and then XRP for pesos, eliminating the need for the dollar as an intermediary, as reported by

. Navin Gupta added that within Ripple’s system, XRP acts as a bridge asset, facilitating the transfer of stablecoins such as RLUSD and other currencies. For example, a GBP to PHP transaction would involve converting GBP to XRP, then XRP to PHP, all processed within seconds using Ripple’s technology, as mentioned by .

There have been recent signs of progress. Ripple has teamed up with Mastercard, Gemini, and WebBank to pilot RLUSD—a stablecoin pegged to the U.S. dollar—for settling credit card payments on the XRP Ledger (XRPL), according to

. This trial, announced at Ripple’s Swell 2025 event, is designed to show how regulated stablecoins could modernize traditional payment systems while ensuring regulatory compliance. WebBank, which issues Gemini’s crypto-rewards credit cards, will look into using RLUSD to settle Mastercard transactions on XRPL, pending regulatory clearance, as reported by . If the pilot succeeds, it would be among the first times a U.S. bank uses a public blockchain to settle fiat credit card transactions, as noted by .

This effort reflects broader trends in the financial sector. Mastercard has been expanding its crypto collaborations, including a partnership with

to enable on-chain crypto purchases. Meanwhile, Ripple recently secured $500 million in funding, raising its valuation to $40 billion, as reported by . RLUSD, which launched in late 2024, already has a circulating supply exceeding $1 billion and is backed by cash reserves held at BNY Mellon, as stated by . Ripple President Monica Long emphasized that the project aims to deliver the speed and efficiency of blockchain to backend payment operations, without changing the user experience, as reported by .

Despite these advancements, regulatory challenges remain significant. The BIS’s high risk weighting continues to be a major obstacle; lowering it could unlock XRP’s potential as a faster, more affordable alternative to traditional dollar-based settlements, as noted by

. Until such changes occur, XRP’s use is expected to stay limited to specific cases like the RLUSD pilot, which highlights its value within a regulated environment.