- A proposal urges the SEC to reclassify XRP as a payment asset, aiming to enhance financial liquidity and reduce transaction costs.
- XRP adoption could free $1.5T in capital from Nostro accounts, benefiting banks and boosting financial system efficiency.
- If approved, XRP integration in banking and government systems could drive demand, reducing volatility and pushing its value to $5.
A new proposal submitted to the U.S. Securities and Exchange Commission (SEC) seeks to classify XRP as a strategic financial asset. According to Maximilian Staudinger, who submitted the proposal, integrating XRP into the U.S. financial system could unlock liquidity and reduce transaction costs.
The document notes the inefficiencies in traditional banking systems, where large sums remain idle in Nostro accounts for cross-border transactions. By using XRP as a bridge currency, approximately $1.5 trillion could be freed up, increasing financial flexibility and efficiency.
XRP as a Solution for Banking Inefficiencies
The proposal emphasizes that banks currently maintain substantial funds in Nostro accounts to facilitate international transactions. Shifting to XRP could eliminate the need for these accounts, releasing an estimated $1.5 trillion in capital. This transition would enhance liquidity and provide banks with more operational flexibility.
Additionally, the proposal estimates that adopting XRP could save around $7.5 billion annually in transaction costs. Reducing expenses in cross-border payments would benefit financial institutions and streamline payment processes.
The document also suggests that federal payment systems, including IRS and Social Security transactions, could save up to $500 billion over 10 years. This cost reduction could modernize public financial services and improve payment efficiency across multiple government sectors.
Regulatory Reclassification and Market Impact
A key aspect of the proposal is urging the SEC to reclassify XRP from a security to a payment asset. This reclassification would provide regulatory clarity, enabling banks and financial institutions to adopt XRP without legal uncertainty.
Regulatory approval has historically pushed digital assets price increases by instilling investor confidence and attracting institutional capital. If the SEC approves the proposal, institutional adoption of XRP could surge, driving demand and reducing market volatility.
Financial institutions would gain a streamlined method for liquidity management, potentially accelerating banking adoption. The proposal also outlines a timeline suggesting XRP integration within 6 to 12 months through executive orders and Treasury-backed programs.
Potential Price Movements and Market Considerations
Analysts suggest that regulatory clarity could majorly impact XRP’s valuation. If XRP is integrated into government financial systems and major banking firms, its price could see substantial growth.
The proposal further outlines a plan for banks to use the freed $1.5 trillion in capital for a bulk Bitcoin purchase within six months. However, the market reaction will depend on regulatory approval speed, institutional activity, and macroeconomic factors.
If the SEC withdraws its appeal in the ongoing Ripple lawsuit, XRP’s price could see a major rally. However, prolonged legal disputes could restrain momentum, keeping prices below $1.50.
An XRP spot exchange-traded fund could also attract institutional inflows, potentially pushing its value toward $5. However, ongoing legal complexities may delay ETF approval. Additionally, global trade tensions and inflationary trends could influence price movements, with softer inflation possibly supporting a recovery toward $2.50.
