XRP Escrow: Foundation for XRP’s Transition to Global Reserve Currency, Experts Say

• According to one crypto expert, the XRP escrow that Ripple controls plays a critical role, from providing market liquidity to making the token available to institutions and exchanges.
• He speculated that if institutions like the IMF or the Bank for International Settlements acquired the escrowed XRP years ago, the token would be viable for global reserve currency status.

The US dollar’s dominance as a global reserve currency continues to dip, and the calls for de-dollarization have grown louder than ever in the face of geopolitical shifts. According to two crypto experts, XRP could be the currency that rises to plug the gap and become the global reserve currency.

Black Swan Capitalist founder Versan Aljarrah recently held an interview with Edward Farina, Head of Social Adoption for XRP Healthcare, on the token, the impact that Ripple’s XRP escrow has on the market and what’s next for the crypto.

In their conversation, the concept of the global reserve currency inevitably came up, and according to Farina, XRP could be a viable candidate to become the currency of choice for cross-border transfers and payments.

A reserve currency is any currency held in substantial amounts by central banks or other financial institutions for financial transactions. Countries hold reserve currencies to pay for imports, pay their international debts, endure economic shocks or even moderate a country’s national currency.

Farina noted:

If some key institutions like the IMF or the Bank for International Settlements have purchased substantial amounts of escrow back in 2019-2020, that brings us the conclusion that XRP was always meant to be a world reserve currency.

Farina’s comments come after XRP was endorsed for world reserve currency status by Oliver Michel, the CEO of Tokentus Investment AG, a German Web3 firm, as reported previously by Crypto News Flash.

The XRP Escrow Noise

The two experts also delved into other ecosystem aspects, including the XRP escrow that Ripple controls. This escrow has sparked debate in recent times, with some concerned that Ripple could tank the market by releasing more tokens than the market can absorb. But according to Farina, this is just “escrow noise.”

Aljarrah added that the escrow is a critical part of the XRP market.

Firstly, by releasing XRP from escrow, Ripple is able to ensure the steady and predictable supply of XRP tokens, which is designed to foster more liquidity in the market, because liquidity refers to the ease with which an asset can be bought or sold without significantly impacting the price. By maintaining liquidity, Ripple is able to facilitate the smooth functioning of the XRP ecosystem.

Additionally, Ripple releasing XRP strategically also makes the token available to institutional investors and exchanges, furthering the reach and accessibility of the token, Aljarrah observed.

Meanwhile, XRP is trading at $0.6425, gaining 5% in the past day and just under 20% in the past week.