Key Insights:
- The US could buy XRP escrow at $10k per token, fixing the price for good.
- A major global financial institution might have to ‘endorse’ XRP to make this happen.
- If XRP becomes de facto for global payments, the U.S. would retain its dominance.
XRP, Cardano and Solana have taken the lead in the market after Trump recent announcement of including these cryptos in the US reserves. The announcement has given the crypto market a much needed bullish injection.
How and Why Will the US Replace USD with XRP?
Software engineer and startup founder Vincent Van Code shared a bold prediction about the future of global finance – The US will phase out the greenback by buying XRP escrow using T-bills.
Buying ‘escrow’ means being the custodian, not the owner of the funds. In this case, the U.S. Treasury will hold on to the XRP.
T-bills or Treasury bills are securities issued by the government, therefore, they are one of the most stable money market instruments.
Notably, other major financial institutions associated with the U.S. like the Federal Reserve or the IMF can also make this happen. The Treasury doesn’t need to make this happen necessarily.
By buying XRPs using T-bills, the US will ensure that no other country can manipulate the XRP price. This is because the T-bill’s price will become the de facto floor price of XRP. Therefore, the U.S. will secure its dominance in global finance.
Vincent says the U.S. will negotiate directly with Ripple Labs to buy XRP escrow at a fixed price of $10,000.
This is not hard to imagine since the Ripple Labs leadership (Brad Garlinghouse, CEO of Ripple Labs) is favorably disposed to the new administration. Garlinghouse is a vocal supporter of Trump’s actions and policy towards crypto.
“If XRP is pegged at $10K, it means all global settlements must use XRP,” he pointed out.
Ripple Labs would be able to hold or sell those T-bills.
“T-Bills remain valuable, as Ripple and other holders must interact with USD-denominated assets,” Vincent noted.
Therefore, by hoarding XRP and pegging its price, the US would have effectively ‘reset the global financial regime,’ Vincent notes.
XRP Reserve’s Impact on the Crypto Market?
Vincent highlighted that “If XRP is set at $10K, current holders instantly become multimillionaires.”
At the time of writing, XRP was trading at around $2.6, from this point, $10,000 would mean a 384,515% increase!
While BTC has a maximum supply of 21 million coins, XRP has a maximum supply of 100 billion coins. Around 57.94 billion XRP are in circulation, per CoinMarketCap data.
Vincent also predicted that other countries and corporations will scramble to buy XRP before it gets bought out by the U.S.
Nevertheless, this would spur the adoption of other cryptocurrencies including BTC, ETH, etc. Countries could choose to build reserves with other cryptocurrencies.
This could be huge for the crypto market, as this means a massive spike in liquidity. Note that the President recently gave the nod to a crypto strategic reserve asset, which included XRP, SOL, ADA, BTC, and ETH.
However, Vincent pointed out that the government might regulate retail ownership of XRP if it becomes a reserve asset.
He added that the government might restrict its conversion to Central Bank Digital Currencies or CBDCs.
Declining Dollar Dominance
Undoubtedly, the U.S. is keen to maintain its dominance in the global financial system. By holding XRPs at a fixed price in T-bills, the U.S. could ensure the smooth transition of that dominance from a Dollar-based to an XRP-based regime.
“The U.S. can still control global finance while moving to a post-USD system,” Vincent added.
The formation of the BRICS alliance and the recent announcement of a BRICS currency highlight a global sentiment towards the USD.
Given America’s power to impose crippling sanctions and unilaterally influence the global financial system, many countries are formulating plans to distance their economies from the USD.
The Dollar’s dominance enables the U.S. to exert significant influence in international relations.
The Dollar dominance also offers the U.S. great domestic economic power. Despite having a massive debt-to-GDP ratio, America doesn’t struggle in global finance.
Even though the U.S. has a highly unfavorable debt-to-GDP ratio, President Trump can afford trade wars with several nations. This is possible, in part because of the dollar’s dominance.
Varuni has been in the web3 space for half a decade, witnessing the changing dynamics of DLT, Blockchain and Web3. With 8 years of journalistic expertise, she has a keen interest in emerging technology and their impact on society. She has published news and on-chain analysis articles on Nasdaq as well as some of the top web3, crypto news firms. Currently, she heads The Coin Republic as the Editor-In-Chief.