Insights on Regulated Payment Systems and Blockchain
Antonio Kaplan, a RippleX engineer, recently shared insights on Twitter regarding the pathways for implementing regulated payment systems and foreign exchange (FX) through blockchain technology. He emphasized that compliance and deep liquidity are crucial components for these systems to thrive on-chain.
Launch of the Permissioned DEX
Kaplan pointed out that the forthcoming launch of the Permissioned DEX feature, which is scheduled to go live on the XRP Ledger (XRPL) mainnet in six days, is designed to enhance compliance and liquidity without the risk of capital fragmentation across various private systems. This represents a significant advancement towards establishing a truly global settlement network.
Building Blocks for On-Chain FX and Settlement
Kaplan’s analysis sheds light on the essential building blocks required for a functional on-chain FX and settlement platform that integrates features like shared institutional liquidity, immediate local payouts, and comprehensive policy control within the XRPL. He identified three core elements necessary for this development:
- Credentials (XLS-70): Functioning as a sort of digital passport, these credentials provide verifiable proof of identity or compliance authenticated by reliable authorities.
- Permissioned Domains (XLS-80): Comparable to the visa application process, these domains allow for controlled access.
- Permissioned DEXes (XLS-81): Similar to transportation networks, offering an environment where verified entities can interact.
Regulatory Features in the DEX Protocol
The introduction of the Permissioned DEX will embed regulatory features directly into the decentralized exchange (DEX) protocol of XRPL, enabling compliant financial institutions to engage in DEX operations without compromising their obligations. Kaplan asserts that this innovation is pivotal for enhancing institutional engagement with the XRP Ledger.
Future of the Open DEX
Addressing the future of the existing open DEX, Kaplan reassured users that it will continue to operate as it currently does, allowing unrestricted access for all users to make offerings. Meanwhile, the new Permissioned DEX will coexist, allowing developers and institutions to create permission-based order books linked to verified credentials.
Conclusion: A Robust Financial Ecosystem
Kaplan emphasized that achieving a robust financial ecosystem hinges on the ability of regulated institutions to interact on open platforms, which necessitates verification of counterparties. By enabling credential-driven liquidity on the XRPL alongside open market operations, the ledger is set to become a more viable option for institutions seeking efficient payment, FX, and settlement solutions.
