Ripple CTO on XRP Ledger and Decentralized Liquidity

Crypto pundit John Squire recently shared a post to emphasize the concept of decentralized liquidity on the XRP Ledger.

In a tweet video shared by Squire, Ripple’s Chief Technology Officer, David Schwartz, explains the challenges Ripple has faced in using the XRP Ledger’s decentralized exchange (DEX) for its payment products.

In the video, David Schwartz candidly expressed his frustration that Ripple, as a regulated institution, has not been able to utilize the XRP Ledger’s DEX despite its clear potential benefits. He explained that regulatory requirements prevent Ripple from engaging directly on the DEX if there is any risk of transacting with sanctioned entities.

Schwartz stated, “And a thorn in the side of Ripple for a long time has been the fact that we can’t use the XRP Ledger DEX for our own payment products. Like, this just, I want to rip my hair out. So like, it’s obvious that we would do that. And it’s frustrating that we, endlessly frustrating that we can’t. And the primary obstacle is that Ripple is a regulated institution.”

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He further explained that even unknowingly facilitating a transaction involving a sanctioned individual would be a violation of United States regulations, which has forced Ripple to avoid using the DEX altogether.

The Role of Permissioned Domains

Schwartz went on to outline a proposed solution through the introduction of permissioned domains on the XRP Ledger. According to him, these domains would require participants to prove that they are not sanctioned individuals before being allowed access.

This approach, as he explained, is designed to ensure that participation in the DEX remains compliant with regulatory requirements while still enabling broader access to liquidity provision and consumption.

Importantly, Schwartz stressed that this is not to restrict access solely to large institutions but also to allow ordinary individuals to participate in these permissioned environments.

Institutional Adoption and Benefits to the Ecosystem

Schwartz also underscored the potential significance of these developments in driving institutional adoption of the XRP Ledger. He noted that once permissioned domains are implemented, enterprises will be able to use the DEX to settle payments, move assets, and provide liquidity, all in compliance with regulations

“Finally, enterprises that want to use the DEX to settle payments and move assets and provide liquidity on the DEX will be able to do so,” he said. He concluded that increased activity and liquidity on the DEX would benefit the entire developer ecosystem on the XRP Ledger, as higher flows and volumes add value to the network.

By sharing this video, John Squire highlighted a key perspective on how decentralized liquidity can grow within regulatory frameworks while expanding participation and value on the XRP Ledger.

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