XRP was piloted with 12 banks before xRapid launch, clarifies Ripple executive

Ripple’s Head of Government and Regulatory Relations for APAC and the Middle East, Sagar Sarbhai, recently spoke at a FinTech conference concerning the use of XRP by banks. He also revealed previously unknown information regarding banks and the creation of the xRapid product.

Sarbhai related the story of how XRP was piloted with 12 banks before the creation of the xRapid product. These banks did not have prefunded nostro and vostro relationships with each other and were situated all around the world. He said:

“In 2016 what we did was we piloted with 12 banks. These 12 banks were based across regions across the globe and they did not have prefunded relationships with each other. and what we did was we gave these banks some XRP and asked them to settle within themselves and it worked beautifully.”

While XRP itself fits the use-case of cross-border payments, there needed to be a system in place that allowed banks to utilize it. This included the reduction of volatility risk and accounting for regulatory atmospheres. According to Sarbhai, these were the issues faced by the banks when they piloted using XRP for cross-border payments. He said:

“[They said] we would love to adopt it but we cannot, because there are capital requirements and regulatory uncertainty. So they said that, its volatile, [and that] there are no set of regulations, so we cannot hold those assets in our books.”

This reportedly led the team at Ripple back to the drawing board, an idea which eventually evolved into what xRapid is today. To drive the adoption of the technology, Ripple began moving into partnering with payment providers who were more willing to try on the product. Sarbhai said:

“That works because they don’t have to hold the digital asset on their books but using the piece of software called xRapid they can actually connect to a digital asset exchange, convert fiat to XRP at that time and XRP to fiat in real time on the other end and that actually happens in 3 seconds so there’s no case of volatility risk as well.”

On the general state of blockchain and cryptocurrency technology, Sarbhai mentioned the confluence of three factors that are important – services, technology, and regulation. He stated:

“I think since the time Bitcoin was implemented there was this notion that down with the banks down with central banks clearly that has not happened.”