ISO 20022: A Bridge Between Traditional Finance and Crypto – Are XRP and XLM the Keys? (2024)

FAQs

Does ISO 20022 use XRP? ›

The ISO 20022 XRP protocol serves as a bridge between traditional financial institutions and emerging blockchain-powered payment networks. By leveraging Ripple's XRP cryptocurrency as a medium of exchange, financial transactions can be executed rapidly and cost-effectively without the need for intermediaries.

Beyond XRP and XLM: A Look at the Crypto Landscape

It's important to remember that XRP and XLM are not the only contenders in the ISO 20022 space. Other cryptocurrencies with a focus on cross-border payments and financial messaging interoperability may also emerge as potential beneficiaries.

Both XLM and XRP work in a similar fashion. A financial institution (XRP) or individual (XLM) converts fiat currency to the coin of their choice via the Ripple or Stellar crypto bridge. Using this bridge, a transfer of crypto assets is carried out in seconds.

Definition - ISO 20022 is a global messaging standard adopted by the financial world. It's not just limited to crypto but extends to other financial transactions, including payments, securities, trade services, cards, and foreign exchange. Its goal is to create a universal standard for exchanging financial messages.

The RippleNet ecosystem includes xCurrent, xRapid and xVia. Some of these solutions do not require XRP to function.

Per the judge's statement, Ripple had been selling its XRP token under “Regulation D” in the U.S., which — due to the Regulation's “bad actor disqualification” provision — it can no longer do. That's because the $125 million fine Ripple was subject to in the same ruling disqualifies it.

Stellar (XLM 2.02%) is an open-source, decentralized payments network. It uses blockchain technology to allow users to transfer funds quickly and at a very low cost. The payments network does not show preference to any national currency; instead, the network has its own native cryptocurrency, Stellar Lumens.

The Stellar blockchain's cryptocurrency is called the lumen, a token that trades under the symbol XLM.

Lumens (XLM) are the native digital currency of the Stellar network. They serve as a bridge currency for facilitating multi-currency transactions and preventing spam by requiring small transaction fees. Lumens also ensure minimal account balances, thus enhancing the network's efficiency and security.

Does XRP have a bright future? ›

As Drozdz notes, while current events suggest a positive outlook for XRP, particularly with the new bull market in cryptocurrencies, inherent risks are involved. However, the world of cryptocurrencies is known for its wild swings and unpredictability.

The two platforms initially shared some code as Stellar was basically a fork of Ripple, but they are now based on completely different code bases. Let's continue with a brief overview of Ripple and XRP.

Customers will be able to use the XRP to reape the advantages of blockchain-based transactions through RippleNet and its ISO 20022 membership, which will grant them access to a network of global financial institutions governed by rules and functional standards.

ISO 20022 is a rich, structured and global data standard for financial information in the payments, FX, trade finance and securities markets.

Under ISO 20022, financial institutions are changing the payment messages they send and receive via Swift from the legacy MT (message type) format to the new MX (message type XML) format, which is more transparent, holds more data and is expected to boost interoperability between banks.

In most cases, XRP is used as a bridge currency for on-demand liquidity outside the U.S. A bridge currency gives businesses a common currency to use in international and cross-border financial transactions, similar to the way the U.S. dollar has been used.

The platform has undergone a rebranding process, demonstrating its adaptability and responsiveness to the evolving needs of the blockchain space. XPR Network has also demonstrated its compatibility with the ISO 20022 standard, indicating its readiness to align with global financial communication standards.

Several banks, including Santander and the Commonwealth Bank of Australia, have confirmed strategic partnerships with Ripple Labs. Why is Ripple good for banks? Ripple's underlying technology is good for banks because it's faster and more affordable than traditional cross-border payment protocols.