As pressure builds across global markets, Zach Rector, CEO of Digital Ascension Group (DAG), suggests XRP could benefit from an impending liquidity unlock.
In a recent video commentary, Rector explained how major changes in financial infrastructure could free up trillions of dollars trapped within the banking system. According to him, these changes could put XRP in a favorable position as institutions push for faster, cheaper, and more efficient settlement.
$27 Trillion Tied Up in Legacy Banking
Notably, Rector argued that the global financial system still depends on outdated frameworks that slow payments, raise transaction costs, and leave massive amounts of capital sitting idle instead of flowing through the economy. He mentioned the SWIFT network as one major source of inefficiency in cross-border payments.
The market pundit pointed out that banks rely on nostro and vostro accounts to complete international transactions, which forces them to lock up an estimated $27 trillion worldwide to maintain liquidity. This delays payments, drives up costs, and limits the capital available for lending and investment.
He also addressed the rollout of ISO 20022, which attained full adoption last month. While Rector admitted that the new standard improves communication between financial institutions, he noted that it does not fix settlement delays. Instead, he called it a foundation for future real-time settlement rather than a complete solution.
Why Stablecoins Fall Short for Institutions
Speaking further, Rector argued against the idea that stablecoins can solve these global settlement challenges on their own.
“Stablecoins really aren’t even meant for the public. I think that’s a misconception that a lot of people have because they have been using USDC or Tether, and both of those are liabilities,” he remarked.
He said banks designed most stablecoins for internal use within closed, permissioned systems. As a result, institutions would remain reluctant to hold stablecoins issued by other banks due to counterparty risk and balance sheet concerns.
According to him, heavy reliance on stablecoins could deepen liquidity fragmentation. Specifically, banks would need to manage multiple digital liabilities from different issuers, which would recreate the same inefficiencies the industry aims to remove.
XRP Exists as a Neutral Settlement Bridge
Rector called XRP a neutral asset that can move value between institutions without the need for pre-funded accounts or exposure to another bank’s balance sheet. He highlighted its ability to settle transactions in seconds at a low cost while avoiding jurisdictional and counterparty risks.
“This is where XRP shines,” Rector said. “It becomes the universal settlement layer between all of the intermediaries, institutions, enterprises, [and] banks for backend settlement between infrastructures.”
He also highlighted the XRP Ledger’s track record, noting that the network has operated for more than a decade without extended downtime.
According to Rector, banks have already tested the ledger extensively for backend settlement and interoperability. This has helped to prove its role in institutional finance rather than everyday consumer payments.
Meanwhile, instead of mass retail stablecoin adoption, Rector said banks are more likely to issue tokenized deposits and on-chain money market products. For instance, JPMorgan recently launched its first money market fund on Ethereum.
Notably, these tools allow banks to keep treasury yields while presenting customers with interest-bearing digital deposits that settle instantly.
He noted that regulations prevent stablecoin issuers from passing treasury returns to holders, which limits their appeal to consumers.
However, tokenized deposits let banks pay interest while enabling real-time transfers and programmable features. As adoption grows, Rector said XRP could move value between institutions based on liquidity availability and transaction efficiency.
A Market Reset and Switch to Digital Rails Looms
Rector also warned of a broad market reset due to high interest rates, excessive leverage, demographic pressures, and rising debt levels. He said equities, bonds, real estate, commodities, and derivatives could all see massive repricing as markets unwind.
Despite these risks, Rector suggested that the reset would be a transition rather than a collapse. He said governments will need real-time settlement systems, shared ledgers, and programmable money to restore stability.
According to him, blockchain-based digital rails could make it easier to implement stimulus distribution, tax collection, and liquidity management in the next phase of the global economy.
Meanwhile, Rector highlighted the growing role of automated market makers (AMMs) on networks like the XRP Ledger. He said AMMs tighten spreads, reduce arbitrage, close liquidity gaps, and stabilize prices through automated rebalancing.
Amid the expansion of automation, Rector expects markets to become steadier and more grounded in fundamentals. He believes this change will reduce extreme volatility and limit the outsized opportunities that defined earlier market cycles.
Rector concluded that once tokenization, real-time settlement, and automated liquidity become standard, markets will move toward long-term efficiency. In that environment, consistent returns will replace speculative gains. He said XRP could benefit as institutions embrace a more efficient and fully digitized global financial system.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
