Wealth Manager Completes Seven-Figure Loan with XRP as Collateral

A wealth management firm has completed a seven-figure loan with XRP as collateral, aiming to demonstrate how XRP could act as backing for loans. 

Digital Wealth Partners, a notable wealth manager, revealed this feat in a recent post on X. According to them, the transaction shows the growing use of crypto assets in traditional finance, especially XRP, which had witnessed slower DeFi growth compared to rivals like Ethereum.

Faster and More Flexible Lending  

Notably, Digital Wealth Partners stated that the loan allows XRP holders to access liquidity without selling their assets. Interestingly, this structure presents an alternative to conventional financing and meets the needs of institutions seeking speed and flexibility. 

We are pleased to report that a seven-figure loan was recently completed using #XRP as collateral for one of our clients. This marking a milestone in digital asset-backed lending for our firm. Read on to learn more:
1/11 🧵 pic.twitter.com/CVTf43j8b6

— Digital Wealth Partners (@DWP_advisors) January 17, 2025

The firm stressed that blockchain technology played a major role in ensuring that the process is streamlined by removing paperwork delays and bolstering security. According to them, they completed the deal within 72 hours, unlike traditional loans that take weeks to finalize. 

They credited smart contracts for the success of the transaction. For context, smart contracts help to automate payment processing, reduce manual intervention, and minimize errors. 

According to Digital Wealth Partners, the loan structure lets borrowers retain ownership of their XRP while quickly accessing funds, with flexible terms available for market participants. However, details on these terms remain unclear, as well as specific information on the loan amount.

Meanwhile, the firm noted plans to further bridge digital assets with TradFi. They revealed that they are currently working with partner institutions to expand the lending opportunities. Looking ahead, they expect support for more assets, faster loan approvals, and larger loan amounts.

Potential Issues

However, market participants have pointed to price fluctuations as a potential issue. One commenter asked what would happen if XRP’s value increases. 

However, this is a sum-positive event, and in such a case, borrowers may have the option to pay off their loan or borrow additional funds, according to crypto market pundit Max Avery.

You can pay your loan off or just keep making your payments or potentially borrow more against the collateral

— Max Avery (@realMaxAvery) January 18, 2025

On the other hand, if XRP’s value declines, borrowers could receive a margin call. For this event, they may need to add more collateral, make payments to balance the loan, or pay it off entirely.  

XRPL Now Making Progress in DeFi

Notably, general DeFi lending has observed remarkable growth despite the XRPL ecosystem lagging in this area. Data from DeFiLlama indicates that Aave leads the charge in this sector, with $21.697 billion in total value locked (TVL) at press time.

With the XRPL making recent progress in DeFi capabilities, such as the launch of AMM functionality last March, the ecosystem could start looking into exploring this area in the near future. For context, the XRPL community discussed an exploration of native staking on the network last year.

Despite their promises, the XRPL does not support smart contracts due to potential risks. However, as part of the progress toward improving its DeFi capabilities, last September, Ripple confirmed plans to introduce programmability to the XRPL through native smart contracts and the use of the EVM sidechain.

In addition, Flare Labs is also looking to introduce its FAssets protocol, which would allow market participants to mint FXRP and use the token with smart contracts.