Banking Expert: When Banks Start Using XRP, the Price Will Be Calculated Based On This

Computer Engineer and Banking expert CharuSan XRP has shared a detailed explanation of how XRP could function within institutional finance, arguing that traditional market capitalization models do not accurately represent the asset’s intended role.

In a recent tweet, CharuSan XRP described XRP as a “digital commodity” designed for liquidity management and cross-border settlement rather than speculative valuation alone.

XRP and the Institutional Liquidity Argument

In the post, CharuSan XRP stated that market capitalization is primarily a metric used for stocks and should not be applied in the same way to an institutional bridge asset like XRP. According to the explanation, the value of XRP in a mature institutional environment would depend more on the availability of liquidity within payment systems than on circulating supply figures.

The post specifically referenced banks, foreign exchange markets, clearing institutions such as the Depository Trust & Clearing Corporation (DTCC), and Nostro/Vostro account systems.

CharuSan XRP argued that if these entities begin using XRP at scale, the asset’s price would be influenced by what was described as “Available Effective Liquidity” within Ripple Payments and On-Demand Liquidity services.

The commentary suggested that XRP’s utility would come from supporting large transaction volumes across international financial systems. Rather than focusing on supply alone, the post emphasized the importance of liquidity depth and the ability to process simultaneous global transactions without major price instability.

Velocity and Liquidity Depth

A central part of the discussion focused on XRP velocity. CharuSan XRP argued that transaction speed alone cannot replace liquidity depth. The post stated that even if XRP moves quickly between institutions, large-scale financial activity still requires substantial liquidity pools to prevent slippage and reduce volatility during settlement periods.

The tweet included the claim that “1 XRP can circulate a maximum of 10 times a day,” which later prompted a question from another user identified as Buckle Up. The user asked where the estimate originated and whether it meant XRP could only process ten transactions daily.

In response, CharuSan XRP clarified that the statement referred to the “Commodity Theory of Money” and the flow of institutional capital rather than blockchain transaction limitations.

According to the reply, institutional funds and market makers cannot continuously recycle capital thousands of times per day because of operational requirements, legal obligations, and settlement procedures.

The response further argued that, despite blockchain speed, the broader financial system still operates within regulatory and operational constraints that limit how often large pools of institutional capital can realistically turn over. Based on that reasoning, CharuSan XRP stated that the annual net velocity of capital across institutional systems stabilizes around ten.

XRP’s Proposed Institutional Function

The overall argument presented XRP as an asset designed to support high-value liquidity transfer rather than retail-scale transactional use alone. CharuSan XRP maintained that deep liquidity pools and higher unit values would be necessary to minimize slippage and help financial institutions manage exposure to volatility during cross-border settlement.

Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are advised to conduct thorough research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.

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