In simpler terms, companies that deal with conventional finance (TradFi) are increasingly open to the concept of representing financial assets as digital tokens on publicly accessible blockchains. The competition to tokenize financial assets using blockchain technology is becoming more intense.
Markus Infanger, senior vice president at RippleX, explains that traditional finance (TradFi) industry players are now transferring financial assets onto blockchain platforms. This move is driven by their intent to put these assets into use and address challenges within diverse value chains.
During Paris Blockchain Week, Infanger had an exclusive conversation with CryptoMoon. He shared that the use of blockchain technology by Traditional Finance (TradFi) is no longer just a theoretical concept but is becoming a reality.
“Infanger announced that we’re beginning a significant change in how blockchain technology is perceived, transitioning from excitement and buzz to practical applications. This transformation is already underway.”
TradFi wants holistic blockchain solutions
According to the executive’s remarks, the predicted worth of tokenized markets is estimated in research to be an astonishing $16 trillion – a figure that dwarfs the current market capitalization of the entire crypto sector eightfold.
“A couple of years ago, many of us in this space were envisioning that. It’s getting closer to reality, and it’s happening on public blockchains. At some point, it looked like it would only happen on JPMorgan Coin or IBM.”
Infantas mentioned that talks with several financial organizations about sophisticated discussions are in progress. They are investigating the possibility of launching tokenized assets on the XRP Ledger through collaborative projects on this matter. These entities have already arranged distribution channels and can eloquently express their intended use cases and preferred applications of the underlying blockchain.
In November 2023, HSBC collaborated with Metaco, a tech company owned by Ripple, enabling institutional investors to store digital securities on HSBC’s novel custody platform.
In simpler terms, Infanger mentioned that Ripple’s business is evolving to offer a more comprehensive solution by integrating different functionalities based on the XRP Ledger (XRPL).
Ripple is commonly perceived as a company focusing primarily on payments, offering a blockchain system for efficient financial transactions. Lately, however, it has attracted attention from both traditional finance (TradFi) and decentralized finance (DeFi) communities due to its expanding capabilities.
“Our company consists of three parts: a custody division, a payments division, and collaborations with the XRP Ledger. This comprehensive setup offers a valuable solution for traditional finance and developers seeking to tackle Decentralized Finance (DeFi) challenges,” Infanger elaborated.
Ripple’s stablecoin
Ripple’s latest announcement that it intends to launch a U.S. dollar stablecoin on XRPL and Ethereum will enhance its services for institutions. I had the opportunity to chat with Ripple CTO David Schwartz regarding the specifics of this upcoming stablecoin.
In simpler terms, Infanger provided more information about what drives Ripple’s stablecoin, explaining that the stablecoin market has the potential to grow up to $2.8 trillion within the next five years, considering that there is approximately $22 trillion worth of funds currently not connected to the traditional financial system.
Currently, we’re at a $130 billion market size, indicating strong demand and significant potential for massive expansion. In other words, we’re just getting started. – Infanger’s explanation paraphrased.
A significant factor was the persistent demands from developers within the XRPL community for a top-tier stablecoin solution, such as USD Coin (USDC) or Tether (USDT). According to Infanger, Ripple had previously explored the use of stablecoins in conjunction with XRP (XRP) and its payment system in limited tests.
“We really envision our institutional DeFi use case on one hand, tokenization on XRPL and then in our payments product for optionality and some use cases alongside XRP using the stablecoin and for the XRP ecosystem as a whole.”
Ripple is still keeping quiet about the release date for their stablecoin and the names it might go by on the XRP Ledger and Ethereum networks.
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2024-04-18 12:50