End of Road for XRP? Ripple vs SWIFT Debate Escalates on Settlement Rails

Tom Zschach, the Chief Innovation Officer at SWIFT, has once again stirred a fresh debate by attacking Ripple’s XRP settlement rails. Zschach stated that banks are unlikely to adopt XRP, noting they would instead favor their own payment rails, tokenized deposits, or regulated stablecoins. Market analysts debate whether this means the end of the road for XRP ahead.

Banks Won’t Need Ripple’s XRP Settlement Rails, Says SWIFT CIO

Tom Zschach, the SWIFT CIO, recently raised a question about whether stablecoins are the new settlement rails. Whether it’s issuers like Circle (NASDAQ: CRCL), or network building the L1 infrastructure platforms. Responding to this on LinkedIn, one user stated Ripple’s infrastructure has been laying the rails wherein XRP serves as the bridge for liquidity across global currencies and stablecoins.

The user added that stablecoins like USDC, and other tokenized assets can run on top of the rails, while Ripple’s XRPL Ledger will serve as the settlement layer, making the whole process more efficient. Responding to this, Zschach raised a doubt about whether banks would be comfortable in outsourcing the settlement to XRP, “that isn’t a deposit, isn’t regulated money, and doesn’t sit on their balance sheet”.

Based on this, Zschach argued that banks will not “outsource settlement finality” to XRP. Instead, he noted, institutions are more likely to rely on internal payment rails, tokenized deposits, or regulated stablecoins that they already trust.

Why XRP Dominates Over Traditional Payment Rails?

Industry critics point out the long-standing inefficiencies of the global banking system. As of today, banks pre-fund trillions of dollars across nostro and vostro accounts worldwide to facilitate cross-border payments. These idle funds remain locked and unproductive. However, Ripple’s native crypto eliminates the need for pre-funded accounts by acting as a neutral bridge asset. Analysts believe that the blockchain firm will capture 15% of the SWIFT market share in five years.

While banks such as JPMorgan, Citi, and HSBC can build proprietary settlement rails, critics note that these systems remain isolated. Moreover, bank-operated rails still face the same friction and trapped liquidity issues. On the other hand, XRP sits outside of a bank’s balance sheet, allowing it to serve as a scalable settlement bridge across multiple institutions.

SWIFT CIO Zschach emphasized that “liquidity is one thing; legal enforceability is another.” To address this, Ripple has been working with regulators for over a decade. It has secured licenses in key jurisdictions, launching On-Demand Liquidity (ODL) corridors. Furthermore, its recent launch of RLUSD stablecoin is part of the company’s broader compliance-focused strategy.

Furthermore, tokenized deposits and stablecoins that work with banks do not solve the issue of continuous settlement, and transfers outside business hours are often restricted. By contrast, XRP’s ledger operates 24/7/365 with no downtime or dependency. This is the cryptocurrency cuts costs in ways that internal bank rails cannot replicate.

Popular XRP community member $589 noted that “SWIFT’s current system serves as a messaging network rather than a settlement platform, continuing to rely on nostro/vostro accounts”.