Ripple: a collaboration for the tokenization of RWA

Today Ripple announced the extension of its collaboration with Archax to promote the tokenization of Real World Asset (RWA). 

The objective of this extension is to bring hundreds of millions of dollars of tokenized RWA assets onto the XRP Ledger over the course of the next year.

Ripple: The tokenization and the RWA

For a long time, many have believed that tokenization and RWAs will become a key element in the growth of the crypto markets. 

The basic idea is to use tokens that can be created and exchanged on blockchain to represent on-chain assets of the real world, both physical and intangible. 

The creation of tokens has now become very simple, but the problem in this case lies in the connection with real assets, which in themselves are not intrinsically tokenizable. 

Once the problem of the direct connection between the tokens and the real assets is solved, the latter can be said to be successfully tokenized, and the tokens thus created are called RWA (Real World Asset).

The collaboration of Ripple for the tokenization of RWA

The idea of Ripple is to make XRPL (XRP Ledger) one of the main blockchains for the tokenization of Real World Assets.

To achieve this, they have decided to extend their collaboration with Archax, which in turn collaborates with the main financial institutions to enable them to tokenize their financial RWA. 

The objective of this extension is to lead financial institutions to use XRPL to tokenize their RWA.

The collaboration between Ripple and Archax was launched in 2022, when Archax decided to collaborate with Metaco to offer custody services for digital assets to its clients. Metaco in turn was acquired by Ripple in the middle of last year. 

Ripple and Archax moreover share a compliance-focused approach. In fact, both companies work together with regulators and policymakers to try to bring the benefits of blockchain technology into the traditional financial infrastructure.

Archax moreover is the only custodian, intermediary, and market for digital securities regulated by the British FCA.

The stablecoin

Today Ripple also announced the launch of its own stablecoin.

It will be called RLUSD (Ripple USD), and it will be collateralized in American dollars (USD) and convertible at par. 

It will be issued both on XRPL and on Ethereum, and it should arrive by the end of the year. 

It should be noted that with the entry into force of the MiCA in the EU, stablecoins in the old continent are now effectively regulated, making it easier for a company like Ripple to issue one in compliance with the law. 

The crypto XRP

XRP Ledger (XRPL) is the blockchain created by Ripple and has XRP as its native cryptocurrency. 

XRPL, thanks to this agreement, will also become a base for the tokenization of RWA, and for DeFi at an institutional level. 

XRP, as the native cryptocurrency of this blockchain, will be used to pay the fees. 

It is worth noting, however, that for now the positive news regarding the developments of Ripple has not had a positive impact on the market value of XRP. 

Although the current price is 1% higher than that of 24 hours ago, it is still 7% lower than that of seven days ago, and 20% lower than that of the beginning of the year. 

In other terms, the 2024 of XRP has not been as performant as that of other criptovalute, such as Ethereum. It is worth noting that Ethereum is likely to become the reference blockchain for the RWA token sector. 

To tell the truth, the price of XRP has been oscillating around $0.5 since September 2022, although with some temporary peaks at almost $0.8, like in July of last year. This year, for example, its price has never managed to rise above $0.7. 

The current price is even in line with what it reached in April 2018 after the burst of the great 2017/2018 bubble, although it later fell further during the second phase of decline. 

The comments 

The SVP of RippleX, Markus Infanger, stated: 

“Our sector is at the beginning of the next important phase of adoption where blockchain technology will provide real utility in financial markets on a large scale. Ripple is excited to see Archax’s vision of leading the adoption of blockchain technology and digital assets among financial institutions come to life, further highlighting XRPL’s credentials as one of the leading blockchains for RWA tokenization.”

The CEO of Archax, Graham Rodford, added:

“We have reached the tipping point for the mainstream adoption of digital assets for real-world use cases. There is a clear real-world utility in use cases such as RWA tokenization for operational efficiency, access to liquid markets, and the transparency inherent in cryptocurrencies, and Archax has already tokenized assets like equities, debt instruments, and money market funds. Financial institutions are now understanding this and we are excited to do our part to help them embrace the technology by bringing their resources onto the XRPL.”