How XRP can provide $5B+ daily ‘working capital’ for currency exchanges

XRP can serve as working capital for currency exchanges in the short term, as transactions typically take only a few minutes.

Orders are routed through central exchanges, and if funds need to be held for a short period of time, companies can hedge that risk using XRP futures.

The idea is to use local liquidity on both sides of a transaction and use XRP as a bridge between them. This approach minimizes the time money is held, thus preventing price discrepancies.

The Oct. 10 deleveraging, which saw the depth of majors’ order books disappear within minutes, served as a stark reminder that execution is path-dependent and stocks can stall during stress.

The hedging toolset has been improved this year, with the CME group listing of XRP and Micro-XRP futures on May 19, and over $19 million in notional trading on day one. The combination shifts the calculus for treasurers who did not have access to a regulated delta hedge in 2024.

Today’s work path is simple.

Source fiat to

If a non-zero hold is unavoidable, open a short CME XRP Futures simultaneously with the spot purchase and relaxing on the destination route. Residuals remain, including futures spot basis and intraday liquidity at the specific expiration date, but an exchange-traded contract reduces friction in onboarding regulated balances.

[Editor’s Note: The methodology below is for educational and analytical purposes only in relation to institutional FX trading and should not be considered FX trading advice for retail investors.]

Holding time dominates basis risk, which increases non-linearly with holding time.

A one-sided 95 percent VaR model over annualized volatility ranges of 40, 55, and 70 percent shows how tight the margin needs to be to keep drift within government bond tolerances.

To keep the VaR at or below 10 basis points, allowable compression is possible to approximately 1.2 minutes at 40 percent volume, 0.7 minutes at 55 percent volume and 0.4 minutes at 70 percent volume.

For a 25 basis point band, the window expands to approximately 7.5, 4.0 and 2.5 minutes respectively. At 50 basis points, a treasury has approximately 30.2 minutes at 40 percent, 16.0 minutes at 55 percent, and 9.9 minutes at 70 percent before the inventory P&L becomes material.

These thresholds precede fees, spreads and slippage, so operating buffers should be smaller.

Local liquidity remains the obstacle.

Kaiko’s in-depth work mid-year ranked XRP as one of the top altcoins with a market depth of 1 percent on screened exchanges, which supports just-in-time execution when orders are split and routed.

Depth is pair and location specific, so routing should be focused on USDT, USD and KRW books that routinely contain larger sizes, taking care with time of day.

XRPL’s own DEX, including the AMM introduced with XLS-30, offers last-mile fills, but no primary size. DeFi Lama shows Treasurers should be takers, not LPs, given the price impact and temporary losses on AMMs.

The corridor view illustrates how implementation depends on the choice of location at the end points. USD and USDT routes typically run through Binance and Coinbase, where XRP books are consistently at depths of 1 percent or more.

EUR pots often use Bitstamp and other European locations, with intraday variability supporting TWAP for larger clips.

The KRW business focuses on Upbit’s retail-driven market, where XRP is often among the top pairs in terms of volume, but liquidity can decline on weekends and after-hours, according to Kaiko’s Korea Market Report.

Applies to the US and Mexico Bitso remains a canonical MXN endpoint referenced in Ripple materials. XRPL DEX can help as a supplementary path for local fillings.

Hedging practices are easy to operationalize.

Spot-only just-in-time conversion can work for micro windows of less than 10 to 15 minutes during liquidity hours in USD, EUR and KRW, especially when split across locations and pairs with a strong depth of 1 percent.

A micro-hedge overlay opens the short CME XRP future at the time of the spot buy, compressing the delta exposure in transit and allowing it to be settled against the destination leg.

Offshore perpetuals introduce financing costs and counterparty considerations that many government bonds cannot accept, while listed CME contracts mitigate these hurdles. XRPL AMM can help with last-mile coverage where CEX books are thin, but the operational design should keep treasuries out of LP rolls.

Failure modes should be treated as design limitations and not exceptions.

1. First, order book evaporation can change a very small-scale stock in an hour if deleveraging reaches the mid-clip, a dynamic observed on October 10.
2. Second, during stressed situations, hedge liquidity may not match the spot position, thus widening the futures spot basis intraday.
3. Third, location-specific regimes are important, including WFD retail flows that introduce premiums and spread variability.
4. Fourth, protocol and SDK incidents remain part of operational risk, including XRPL’s post-launch AMM bug and the later revealed XRPL.js SDK backdoor.
5. Finally, balance sheet costs weigh on banks’ participation.

The Basel crypto standards classify unbacked cryptocurrencies, such as XRP, into Group 2 with punitive capital, and the The EBA draft technical standards aligning the EU’s prudential regime with Basel, which increases the cost of storing XRP inventory on regulated balance sheets.

The decision framework can be divided into three cases.

If both sides can convert in about 5 to 10 minutes, spot-only just-in-time conversion on deep CLOBs can keep the 95 percent VaR within about 25 to 50 basis points, depending on realized volatility.

If the operation takes about an hour, place a futures hedge and spread the execution across multiple locations to limit base drift and execution slippage.

If the routine extends to multi-hour windows, XRP today does not serve as a low-level working capital track because inventory management, capital costs, and event risk dominate.

What comes next is measurable. CME

Kaiko’s post-October debriefs will reveal whether the depth numbers recover or whether vulnerability persists into the fourth quarter. The EBA’s final technical standards will establish the European prudential framework for banking inventories, which will determine the practical scope of just-in-time strategies within regulated government bonds.

Practical implications for FX markets

On a practical level, linking local liquidity to global payment rails is effective when operations teams minimize settlement time, route orders through the deepest books, and deploy a listed hedge when inventory cannot be compressed into just minutes.

The global FX spot averages $7-8 T/day, so even at $5 B/day XRP would represent roughly 0.06% of global FX turnover. This is small in macro terms, but huge in the crypto context.

For context, $5 billion per day would put XRP’s utility-driven flow on par with smaller fiat corridors (e.g. MXN-CLP) and ten times the current ODL peaks that Ripple has alluded to in public filings.

Using this just-in-time working capital strategy, XRP could realistically reach an intermediate $3-8 billion/day in currency settlement volume under current liquidity conditions, and perhaps exceed $10 billion/day as the CME and regulatory infrastructure mature.