Ripple Senior Vice President Markus Infanger argued that the XRP Ledger represents the optimal infrastructure for the next generation of real-world asset tokenization, positioning current market approaches as temporary bridges to what he calls "native issuance." The RippleX head contends that today's reliance on Special Purpose Vehicles will eventually give way to assets that exist purely as digital tokens with embedded compliance and settlement features.
What to Know:
- Ripple's senior VP claims current tokenization methods using Special Purpose Vehicles are "scaffolding" toward true digital asset issuance
- XRP Ledger features built-in exchange, lending protocols, and automated market makers designed specifically for institutional financial use
- Dubai land registry pilot demonstrates practical application of native property title recording on XRPL
From Immobilized Certificates to Digital Tokens
Infanger draws parallels between today's tokenization landscape and the 1970s transformation of capital markets. Back then, organizations like Euroclear and DTCC moved paper certificates into secure vaults while digitizing ownership records. This "immobilization" process created the foundation for modern electronic trading.
Current tokenization efforts follow a similar pattern through Special Purpose Vehicles. These legal structures hold traditional assets like Treasury bonds, real estate, or credit instruments while issuing digital representations on blockchain networks. Infanger acknowledges this approach as "clunky" and centralized but views it as necessary infrastructure while standards and regulatory frameworks develop.
The ultimate goal, according to the Ripple executive, involves "native issuance" where tokens serve as the actual legal instruments rather than mere representations. In this model, compliance gets enforced through code, settlement occurs atomically, and liquidity flows freely across platforms without intermediary restrictions.
Technical Advantages of XRP Ledger Architecture
Infanger's argument for XRPL centers on protocol-level capabilities designed from inception for financial applications. These features, he argues, reduce integration complexity and operational risk for institutions transitioning from SPV models to native issuance.
The ledger includes a built-in decentralized exchange that enables direct token trading without external smart contract routers.
This native order-book system allows immediate listing and peer-to-peer execution for tokenized real-world assets with fewer technical components.
XRPL's consensus mechanism targets rapid finality with minimal transaction costs. Infanger emphasizes this combination as critical for high-volume financial instruments such as tokenized Treasury bills or commercial invoices, where transaction fees and settlement delays directly impact profitability.
The XLS-30 automated market maker standard introduces on-ledger liquidity pools that algorithmically determine prices based on available inventory. This feature enables continuous trading even without matching orders, addressing a key challenge in real-world asset markets that require constant two-way pricing rather than episodic request-for-quote systems.
A proposed XLS-65 lending vault standard would enable protocol-level borrowing and lending without custom smart contracts. Issuers could facilitate secured credit arrangements, such as borrowing against tokenized notes or real estate claims, with standardized rules that enhance auditability and risk management.
Compliance and Custody Integration
The integration of issuance, exchange, and settlement within XRPL's base protocol allows for embedded compliance mechanisms, according to Infanger. Rule sets including whitelists, transfer restrictions, and disclosure requirements can be incorporated directly into asset lifecycles, supporting regulatory alignment as transaction volumes increase.
This composability extends across multiple functions. Tokens can move through primary issuance, secondary trading, collateralization, and settlement without requiring integration of separate external systems.
Infanger positions this as a path toward "embedded" liquidity rather than the fragmented silos that characterize current tokenization approaches.
Early deployment examples support this vision. Ctrl Alt has initiated a pilot program with Dubai's land regulator to mint property ownership records directly on XRPL. By recording titles natively on the blockchain, the initiative aims to streamline property transfers, improve transaction auditability, and provide supervisory authorities with real-time visibility into ownership changes.
The Dubai project also demonstrates institutional-grade custody integration, with Ctrl Alt planning to use Ripple Custody for secure storage of tokenized property deeds.
Understanding Key Tokenization Terms
Several technical concepts underpin the evolution from traditional to native digital assets. Special Purpose Vehicles represent legal entities created specifically to hold assets while issuing blockchain-based tokens that represent fractional or complete ownership. These structures provide legal clarity under current regulations but require ongoing operational oversight.
Automated Market Makers function as algorithmic trading systems that maintain liquidity by automatically setting buy and sell prices based on predetermined mathematical formulas and available token inventories.
Unlike traditional order books that require matching buyers and sellers, AMMs enable continuous trading through liquidity pools.
Native issuance refers to assets created directly as digital tokens rather than as blockchain representations of off-chain assets. In this model, the token itself carries legal weight as the primary instrument of ownership or obligation, eliminating the need for separate legal wrappers or custodial arrangements.
Institutional Adoption Strategy
Infanger advocates for a measured approach to institutional adoption rather than immediate wholesale changes. Financial institutions can continue using Special Purpose Vehicles where required by current regulations while gradually building capabilities for native issuance as legal frameworks evolve.
His strategy acknowledges practical constraints facing banks, asset managers, and corporate treasurers who must satisfy auditors and operate within existing regulatory parameters. The incremental approach allows institutions to gain operational experience with tokenized assets while infrastructure matures.
The Ripple executive positions XRPL as reducing the technical complexity of this transition through built-in exchange functionality, standardized lending protocols, and integrated compliance tools. This approach, he argues, minimizes custom development work and simplifies operational controls compared to platforms requiring extensive smart contract programming.
Closing Thoughts
Infanger's analysis frames current tokenization methods as temporary bridges toward fully digital financial instruments. The RippleX head contends that XRP Ledger's finance-specific design provides institutional users with a more direct path to native digital asset issuance than general-purpose blockchain platforms requiring custom development work.