Key Takeaways:

• Markus Infanger states that Special Purpose Vehicles (SPVs) serve as an interim solution, not the long-term answer, for real-world asset (RWA) tokenization.
• He asserts that native asset issuance will integrate compliance and settlement directly into the asset.
• The XRP Ledger features, such as a decentralized exchange (DEX) and automated market Maker (AMM), provide considerable advantages.

Ripple’s Senior VP, Markus Infanger, advocates that the XRP Ledger (XRPL) is specifically designed for the future of RWA tokenization, suggesting that the current reliance on SPVs is merely transitional.

Transitioning from Immobilization to Native Issuance

In a blog post dated August 12, Infanger compares the tokenization transformation to the 1970s change in capital markets, highlighting how traditional assets transitioned from physical to electronic verification. SPVs act similarly today, forming a bridge that eventually leads to fully digital assets.

“The current model is cumbersome and centralized, but it will become infrastructure for future improvements.”

He emphasizes the necessity for complete digital assets where the token itself embodies the legal record, promoting immediate trades and unhindered liquidity.

Why XRPL Stands Out

Infanger’s advocacy for XRPL stems from its inception as a protocol with financial functions in mind, mitigating risks and integration burdens for institutions transitioning to native issuance.

• Built-in DEX: Provides seamless token trading on the ledger.
• Rapid, cost-effective settlements: Essential for high-volume instruments.
• XLS-30 AMM: Creates pools that maintain continuous pricing and liquidity.
• Proposed XLS-65 standards: Facilitates lending without complex smart contracts.
• Integrated compliance mechanisms: Embeds regulatory frameworks directly into asset management.
• Composability: Enables smooth transitions across various financial nodes without needing disparate external systems.

Signs of Progress

Infanger references a collaboration by Ctrl Alt with Dubai’s land registry to record property titles directly on XRPL as a promising step towards native asset issuance.

SPVs Remain Crucial

He remarks that while SPVs are necessary under existing laws and practices, they should not deter institutions from planning for the future of asset tokenization.

Infanger encourages banks and asset managers to utilize SPVs presently while preparing for the evolution of on-ledger assets into commonplace financial instruments.