How Cryptocurrency Regulation Could Quietly Reshape Global Money Transfers
A recent paper explores whether XRP qualifies as one of the first truly functional "utility" cryptocurrencies by evaluating XRP’s technical efficiency in cross-border payments.
Takeaway: XRP’s future as a practical tool for international finance may depend less on speculative trading and more on how new U.S. stablecoin regulations drive its real-world use.
Key Points
A Leap Beyond Traditional Banking: XRP settles international transactions in 3 to 5 seconds for a fraction of a cent, bypassing the slow, costly, multi-day process of the traditional SWIFT network.
The Stablecoin Connection: Proposed U.S. regulation aims to regulate stablecoins like Ripple's RLUSD. Because these stablecoins run on the XRP Ledger, their legal compliance could indirectly boost XRP’s utility and shrink its circulating supply.
Unresolved Roadblocks: Despite its technical advantages, XRP’s path to mainstream financial integration is threatened by ongoing SEC litigation and looming competition from government-backed Central Bank Digital Currencies (CBDCs).
Have you ever tried to send money to a relative living abroad, or had to wire funds internationally to pay a foreign supplier?
If so, you are likely familiar with the frustrations of the traditional banking system.
The transfer takes days, requires navigating a complex web of intermediary banks, and eats up a significant chunk of your money in fees. For decades, international finance has relied on SWIFT—a secure messaging network that, while reliable, operates on decades-old infrastructure.
Cryptocurrencies originally promised to solve these inefficiencies. However, to the general public, digital assets are mostly associated with wild price swings, overnight millionaires, and speculative bubbles. This leaves us with an open question: how does the blockchain industry transition from speculative trading assets to practical tools that make the global economy work better?
Research
Professor David Krause of Marquette University investigated whether Ripple’s cryptocurrency, XRP, serves as a genuine "functional utility cryptocurrency"—an asset with a clear, operational purpose in the real world.
Utilizing transaction data, market performance metrics, and legislative drafts, Krause analyzed how XRP functions as a "bridge currency" to settle global payments. Importantly, he examined how increased regulation could shape XRP's future by bringing regulatory order to the stablecoin market.
Findings
Krause’s analysis highlights that XRP was designed from the ground up for institutional cross-border payments. In traditional banking, financial institutions must maintain pre-funded "nostro" accounts in foreign currencies abroad to ensure they can settle international transfers quickly.
This ties up trillions of dollars globally. XRP solves this liquidity trap by acting as a temporary bridge asset: local currency is converted to XRP, sent instantly across the blockchain, and converted to the target foreign currency on the other side. While a traditional SWIFT transfer can take up to five days and cost $20 to $50, XRP transactions settle in seconds at a median cost of $0.0002.
The core of Krause’s paper focuses on how regulation could supercharge this ecosystem. Regulation would enforce strict federal rules for stablecoins (cryptocurrencies pegged to the U.S. dollar), requiring 1:1 reserve backing and regular audits. Ripple's compliant stablecoin, RLUSD, operates directly on the XRP Ledger.
Because every transaction on this ledger requires a tiny fee paid in XRP—which is then permanently destroyed or "burned"—increased institutional adoption of a regulated stablecoin like RLUSD will naturally increase demand for XRP while gradually reducing its overall supply.
Limitations and Context
While the technical and regulatory synergy is compelling, Krause urges a balanced view. XRP’s future is far from guaranteed. First and foremost is the ongoing litigation with the U.S. Securities and Exchange Commission (SEC), which has accused Ripple of selling unregistered securities.
If the courts rule against Ripple, XRP’s access to the crucial U.S. financial market could be severely restricted. Furthermore, private cryptocurrencies face heavy competition from central banks in Europe, Japan, and elsewhere, which are developing their own official Central Bank Digital Currencies (CBDCs) that could render private bridge currencies obsolete.
Why It Matters
If these findings hold true, the era of treating cryptocurrencies purely as speculative digital gold is coming to an end. For businesses, financial institutions, and policymakers, this research demonstrates that the true value of blockchain lies in operational utility.
Clear regulatory frameworks like the CLARITY Act do not stifle innovation; rather, they provide the guardrails necessary for traditional institutions to adopt these technologies safely, paving the way for a faster, cheaper, and more inclusive global financial network.
Learn More
Paper Title: Regulatory Clarity and XRP: The Path to Global Institutional Stablecoin Adoption
Author: David Krause (Emeritus Professor, Marquette University)
Journal/Source: SSRN / Working Paper Series
Publication Year: 2025
URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5146841
Econ Today Explains
Economic Concept: Utility Token
Unlike speculative cryptocurrencies like Bitcoin, which are often bought and held as a store of value, a utility token is a digital asset designed to perform a specific function within a blockchain ecosystem. Think of it like a token at a local transit station: you purchase it not to hoard it, but because you need it to ride the train.
In the digital world, utility tokens are used to pay for network transaction fees, run automated smart contracts, or act as a temporary bridge to convert one fiat currency to another. Because a utility token’s value is tied directly to its practical application, its market demand is driven by how frequently the underlying network is used, rather than by pure speculative hype.
This article was written by AI but reviewed by a real human.
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