Two major issues faced by XRP holders

For many years, the XRP Token has confused me. Its native Blockchain—XRP Ledger—has almost no practical use aside from speculation and trading, yet this asset consistently ranks among the top five in market capitalization of Crypto Assets.

In the past few years, the company had a very convenient excuse – no one was willing to cooperate with them because everyone regarded them as a "tainted company" unjustly sued by the SEC. But now that this lawsuit is nearing its end, the company no longer bears the red mark. So, does this mean that the XRP Ledger and its stablecoin will truly develop, thereby proving that the high valuation of the XRP Token is justified? I'm not sure.

The legal tug-of-war over Ripple has ended, but where should XRP go after shifting to stablecoins?

The company is finally about to end its lawsuit with the U.S. Securities and Exchange Commission (SEC). However, its Blockchain is still used very little, and its stablecoin plan faces numerous challenges.

After breaking free from the SEC entanglement, Ripple Labs CEO Brad Garlinghouse's stance is like "a rebirth."

On July 2, the company announced that it is applying for a federal banking license through the Office of the Comptroller of the Currency (OCC), aiming to become the second crypto company to achieve this honor after Anchorage Digital. Additionally, their custody institution, Standard Custody and Trust Company, operating under the regulation of New York State, is also trying to become the first crypto company to obtain a master account with the Federal Reserve in order to directly hold its reserve of $469 million in stablecoin RLUSD at the Federal Reserve.

Garlinghouse said in a tweet on July 2: "As always, we value compliance, and @Ripple is applying for a national bank charter from the OCC. If approved, we will have regulatory oversight at both the state (NYDFS) and federal levels, which will become a new (and unique) trust benchmark in the stablecoin market."

The company continues to expand the infrastructure of RLUSD, announcing a partnership with AMINA Bank in Switzerland and collaborating with OpenPayd, headquartered in London, to build a payment network based on stablecoins.

In addition, the XRP Token itself (mainly held by Ripple Labs and is the native token of the XRP Ledger) has risen by 347% since November 1, and is expected to welcome the first US spot ETF later this year. However, its price has been almost stagnant over the past 6 months.

There are still many serious questions regarding the future of Ripple Labs, the XRP Ledger, and even its stablecoin. But the biggest issue still revolves around its original token — XRP.

As Ripple seems to be shifting its strategic focus more towards stablecoins, it can be said that if RLUSD can truly develop, it may "eat away" all the potential demand that Ripple has tried to cultivate for the XRP Token over the years.

For Ripple, this is a new beginning. However, old problems still persist for this Blockchain company. If XRP wants to achieve the next stage of price growth, certain things may need to change. Here are two key challenges to pay attention to.

XRP usage remains limited

In March 2024, I published an article titled "The Rise of the Billion-Dollar Zombie Coins" in Forbes. Based on my investigative reporting at the time, we decided to feature the XRP Ledger (XRPL) as one of the main subjects of this article.

I wrote: "From the perspective of global capital flows, Ripple Labs has made almost no real progress, and few believe it can replace the Belgium-based banking cooperative known as SWIFT, which handles $5 trillion in cross-border transfers every day. Despite failing to achieve its main goals, Ripple's Blockchain (the ledger of XRP transactions) is still operating normally. It is essentially useless, yet the market capitalization of the XRP Token still stands at $36 billion, making it the sixth-largest Crypto Asset."

This statement is certainly sharp, but I pointed out in the article that as of that time, the fee income of XRPL in 2023 was only $583,000, while its token market capitalization reached $36 billion. This means its price-to-sales ratio is as high as 61,690. It is worth noting that this company has been established for 12 years (it is no longer a small project just starting out). In my opinion, these data indicate that the market is essentially treating XRP as a "meme coin" for speculation, rather than an investment based on utility.

After entering 2024, the fee revenue of XRPL was 1.15 million USD, an increase of only 567,000 USD compared to the previous year. Meanwhile, its market capitalization grew from 33.32 billion USD at the beginning of the year to over 80 billion USD, further skyrocketing its price-to-sales ratio to 103,826.

From what has happened on the XRPL, there is no reason sufficient to support such a surge in market capitalization. Its flagship decentralized exchange (DEX) has a daily trading volume of less than $100,000 most of the time. In contrast, the leader PancakeSwap has a daily spot trading volume exceeding $1 billion, not including the rapidly growing derivatives DEX market, where both Binance and Hyperliquid process monthly trading volumes in the trillions.

In the NFT space, XRPL also lags behind. According to data from Messari, the average daily trading users of XRPL for NFTs in 2024 is only 550 people. Even in the current overall sluggish NFT market environment, the average daily trading users on the Ethereum platform still remain around five thousand people.

Moreover, the XRPL seems to have consistently failed to successfully introduce native smart contract functionality, which is now considered a basic feature in today’s Blockchain, especially as Ripple attempts to expand its focus from payments to broader application scenarios. However, as of June 30, Ripple Labs, in collaboration with Axelar, launched an EVM-compatible sidechain to fill this gap. XRP will serve as the gas Token and native asset for this chain, which may bring new sources of demand beyond payment uses for XRP. However, to establish real, non-speculative demand, the company still has a long way to go.

What about RLUSD?

XRP holders also need to consider whether the launch of the stablecoin RLUSD by Ripple Labs will affect the demand for XRP. After all, the original idea of XRP was to serve as a bridge currency, helping banks to complete cross-currency exchanges at lower costs and with greater efficiency. Now, with the launch of the stablecoin, it is likely to directly compete with this goal, especially as it reinforces the dominance of the US dollar and expands into countries where the use of the dollar is inconvenient.

The growth of stablecoins is as rapid as a rocket. Currently, the total supply of stablecoins has reached $254.79 billion, while the entire industry is still immersed in the positive news of USDC issuer Circle completing a highly profitable IPO last month. The US government is also moving towards passing the GENIUS Act — which will be the first piece of encryption legislation to become formal law, specifically setting operational norms for stablecoins. Against the backdrop of substantial capital inflow and a warming regulatory environment, many people naturally favor stablecoins over XRP as the core of future payments.

Nevertheless, I can still imagine a scenario where both coexist. After all, unless an emerging market officially adopts the US dollar as its national currency like El Salvador, the demand for cross-border exchange will still exist. And from a volatility perspective, stablecoins may actually be more suitable as bridge currencies than XRP.

Ripple Labs Chief Technology Officer David Schwartz also expressed this view of "multi-path coexistence" in an interview this spring: "Providing multiple paths can bring a better experience to customers and also means you can serve more customers. If we could only operate through XRP, then in places where XRP is unavailable, we would only be able to tell customers 'no.'" However, compared to when Ripple Labs was founded in 2012, the Total Addressable Market (TAM) for XRP has likely shrunk today.

In addition to the overall rise of stablecoins, another motivation for Ripple to launch RLUSD may be to get rid of the "red letter effect" caused by the SEC lawsuit against XRP. Owen Lau, Managing Director at Oppenheimer & Co, stated in an interview with Forbes in April 2024: "Ripple may feel they have no choice but to issue a stablecoin to persuade banks and financial institutions to cooperate with them. These institutions may be reluctant to hold or use XRP due to its volatility and regulatory risks (i.e., the lawsuit with the SEC)."

However, to truly achieve explosive growth for RLUSD and bring value back to XRP, Ripple needs to act quickly. Currently, the stablecoin market is dominated by two giants: Tether (158.3 billion USD) and Circle (62 billion USD). Ripple's most promising breakthrough may be to create value and use cases on the new sidechain, such as promoting the use of RLUSD through incentive mechanisms, thereby increasing the demand for XRP needed to pay gas fees - but this is still a very big assumption.

At the same time, Tether and Circle's products have been widely distributed and are intensifying their market expansion. Tether not only dominates the trading market but has also just announced that its Token can be used for gas payments on the new chain Stable; while Circle has established a high-profile partnership with Coinbase to promote the use of USDC on the Base chain and is collaborating with Shopify merchants to support USDC payments.

Despite the promising nature of the stablecoin sector, this is by no means a "blue ocean" for RLUSD.

An Advantage of Ripple

If Ripple Labs has a trump card, it is that it may be the "most capital-rich encryption company" in the world. According to its Q1 2025 report, the company currently holds 4.56 million XRP Tokens in its own wallet, worth $10.27 billion. But that's not all: the company has also deposited 371 million XRP in custodial accounts, valued at $83.5 billion at current prices, which will be gradually unlocked over the next few years.

Although it is impossible to recover so much capital by selling all these tokens at once, it seems that this company is almost unlikely to truly "burn" its money.

For XRP holders, this means that the company has almost "unlimited" resources to drive the demand construction of its new EVM sidechain, as well as to cultivate partnerships and use cases for RLUSD and even XRP itself.

However, that being said, none of this may matter to XRP holders—they don't seem to be worried about the potential for such significant selling pressure in the future. After all, despite the lack of substantial progress on the XRPL ledger in recent years, the price of XRP has remained inexplicably "sturdy."