XRP Is Not Competing With Legacy Banks, It’s Expanding With The Old Guard

• Mastercard, JPMorgan, Ripple, and Ondo recently completed a pilot demonstrating the XRP Ledger’s capability to boost interbank settlement rails.

It’s a common misunderstanding that the creators of XRP’s goal is to come up with an asset that will render banks and other financial institutions obsolete. On the contrary, the asset intends to bridge traditional with on-chain finance. It’s not there to compete with institutions; it’s there to build with them.

Recently, XRP reached another milestone, proving it’s growing alongside the old guard of traditional finance (TradFi) and new players in the industry. On Wednesday, Ripple, JPMorgan via Kinexis, Ondo Finance (ONDO), and Mastercard announced the completion of a landmark pilot transaction connecting the XRP Ledger (XRPL) to interbank settlement rails.

The move marked the first time that US Treasuries were settled across borders and with different banks. It accomplished the feat in real-time despite operating outside traditional banking hours.

The XRP Ledger, Ripple, Mastercard, Ondo, and JPMorgan Pilot

During the pilot, Ondo processed Ripple’s redemption of the Ondo Short-Term US Treasuries Fund (OUSG) on the XRPL. As its name says, the asset offers investors exposure to short-term US Treasuries with 24/7 instant mints and redemptions.

Then, Mastercard’s Multi-Token Network (MTN) directed the messages to JPMorgan’s Kinexys network. MTN enables business-to-business (B2B) payments fast, efficiently, and predictably using blockchain. Meanwhile, Kinexis is an institutional-grade tokenization, treasury liquidity management, and business payment platform based on blockchain, operated by JPMorgan.

Finally, JPMorgan settled the transaction in US dollars to Ripple’s account in Singapore.

Why the Milestone Matters

The entire pilot displayed the interoperability of XRPL with JPMorgan’s and Mastercard’s legacy payment rails, as well as the innovative infrastructure of Ondo and Kinexys. Likewise, the few steps taken to complete the entire transaction demonstrated a streamlined process that improved efficiency and showed how the ledger can seamlessly integrate with both traditional and on-chain systems.

Ondo and Mastercard highlighted that they just laid the foundation for “24/7 global markets that never close.” On the other hand, Ripple stated that combining the XRPL with the global banking system enables institutions to execute cross-border transactions in a single, integrated flow. It effectively eliminates the bottlenecks introduced by redundancy among third-party intermediaries.

Where Does XRP Fall in All of These?

Some critics have questioned where XRP fits into the entire transaction. We can’t really blame them since only its decentralized ledger was explicitly mentioned in the press releases of the parties.

However, it’s worth noting, “Nothing can move on XRPL without XRP.” These were the exact words of Ripple CTO Emeritus David Schwartz when he responded to someone claiming that a token can move within the ledger without using its native coin. Furthermore, it’s exactly why, time and again, Ripple CEO Brad Garlinghouse has referred to XRP as “Ripple’s Northern Star.”

While the pilot barely moved the needle on XRP due to its minuscule fees, the potential flow of trillions of US dollars in transactions once mass adoption proceeds means the asset would scale exponentially with demand.

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