Ripple has published a new white paper arguing that the institutional crypto market structure still lacks the infrastructure, liquidity and risk needed to support large-scale participation. In the paper, Ripple says digital assets need a Digital Prime Brokerage model built around credit, cash and T+1 settlement if the market is to mature beyond its exchange-centric architecture.
Ripple’s Middle East & Africa Managing Director Reece Merrick announced a white paper on X: “Traditional currencies meet digital assets, but the bridge can still be unstable. Managing the matrix of exchange and bilateral risk is not only a headache, a tax on your capital inefficiency. Ripple’s new white paper introduces Prime, Ripple’s Digital Digital model Ripple introduces Prime, DigitalBroadline risk model 1:1 relationship.”
Ripple Targets Crypto Market Fragmentation
The white paper, titled The Blueprint for Institutional Digital Assets Trading, characterizes today’s OTC crypto market as structurally inefficient compared to foreign currencies. Ripple says that institutions are still forced to operate in separate environments where execution, credit maintenance and credit are combined, collateral is separated, and firms must maintain bilateral relationships. This paper identifies three main controversies: multiple credit risk, leveraged capital and diversified asset risk.
Ripple’s main claim is that crypto should lend directly to the FX market structure. “This paper explains why digital asset markets require a trading-style model that includes credit intermediation, consolidated T+1 settlement, and the separation of issuance, custody, and credit into clearly defined roles,” the paper says. It adds that a Digital Prime Broker, or DPB, should act as a “prime shared infrastructure” that can be configured to suit the needs of different clients rather than forcing everyone into one rigid model.
Under that framework, the client will execute a single master contract with a master broker, while trades executed by authorized finance providers and market makers will be assigned to that broker. Ripple says this replaces a web of bilateral exposure with a single contracting company, simplifying legal workflows, compliance and settlement while reducing the risk of failure across the board.
The paper is highly dependent on financial efficiency. Ripple says the current market is still dependent on high liquidity or liquidity, which forces repeated daily asset transfers and leaves the security stuck in trading. In one example, say a client who buys 100 BTC and sells 80 BTC during the same cycle will only need to settle net 20 BTC under the T+1 model, cutting the total fund movement by about 89%.
It also says the current system hides financial costs rather than eliminating them. Ripple says that offshore exchanges and bilateral currency providers typically use default exchange rates of about 11%, about 7% above the risk-free rate, which means a daily funding cost of 1.92 basis points, or $192 per $1 million per day. According to Ripple, the DPB model will make those costs transparent instead of embedding them in the distribution or financing them with interest-free collateral for customers.
The paper also includes external support from COO of XTX Markets Mike Irwin, who writes: “The Digital Prime Brokerage model will enable institutional participants, including store aggregators, to reduce operational risk, unlock trapped capital, and grow at scale. Limits instead of imposing a rigid, one-size-fits-all model.”
XRP exists, but not as a main issue. Ripple states that the XRP Ledger may support early settlement through onchain lines of credit that fund obligations prior to the standard T+1 settlement cycle, with financing fees charged transparently to the party requesting early settlement. That makes XRP part of the proposed pipeline, but the main thesis of the whitepaper is broader: institutional crypto still needs a better market structure before it can look like a mature currency.
At press time, XRP traded at $1.4129.
The featured image was created with DALL.E, a chart from TradingView.com
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