David Schwartz, the CTO of Ripple, has provided new insights into the company’s recently announced roadmap, which focuses on integrating major institutions into the world of decentralized finance (DeFi). Schwartz discussed this topic during a podcast at the ongoing 2024 CoinDesk Consensus conference.
The significance of Ripple’s institutional-focused roadmap lies in its aim to enable institutions to create highly regulated financial products that can interact with DeFi ecosystems. Schwartz used the example of a regulated financial entity issuing traditional loans for real estate or businesses. This debt could then be tokenized and traded within a DeFi system.
Schwartz emphasized the importance of institutions in driving mass adoption of cryptocurrencies, drawing parallels with the evolution of the internet. He noted that the internet initially benefited from government and military use, which led to widespread grassroots adoption. He believes a similar approach is necessary for the dominance and expansion of any system.
In this context, Schwartz highlighted the XRP Ledger as a blockchain platform well-suited for these types of applications.
Schwartz also suggested that institutional adoption is now widely accepted as a stepping stone to grassroots adoption. However, he admitted that Ripple’s initial move in this direction was premature. While institutions adopted Ripple’s payment technology, such as using XRP for transactions, the end users were unaware of the blockchain involvement. Banks using Ripple’s technology did not bring their customers into the blockchain space.
Schwartz pointed to stablecoins like USDT as evidence that the crypto space has embraced Ripple’s strategy of targeting institutions for mass adoption. Stablecoins are as institutional as it gets, yet they fuel completely decentralized economies.
Schwartz also expressed excitement about the current trend of institutions not only adopting blockchain technology but also bringing their customers onto the blockchain and enabling blockchain-based activities.
Regarding regulation, Schwartz addressed skepticism by explaining that it is possible to have thoroughly regulated assets like stablecoins, loan portfolios, or tokenized securities. These assets can undergo rigorous KYC and AML processes for every customer, while the underlying tokens representing ownership or collateral can remain completely decentralized.
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