Ripple Labs, the company behind the cryptocurrency XRP and Ripple payments, is expanding its business to offer clients custody, a type of service that holds the digital assets of institutions and individuals on their behalf.
Ripple’s nascent custody business will be operated by its newly formed division called Ripple Custody. The product, which is currently aimed at banks and fintech firms, will guide Ripple’s clientele toward the adoption of blockchain-based solutions.
To ensure a seamless transition, Ripple Custody just debuted a slew of features that include pre-configured operational and policy settings, functionality for tokenizing Real World Assets (RWA), integration with Ripple’s XRP Ledger blockchain platform, enhanced hardware security module (HSM) options, AML risks monitoring, and improvements to the platform’s usability and user interface.
“Ripple’s custody technology offers a single platform for safeguarding and managing digital assets, designed with the security and compliance standards that top global banks and financial institutions have come to rely on,” Aaron Slettehaugh, Ripple’s senior vice president of product, said in a statement. “With new features, Ripple Custody is expanding its capabilities to better serve high-growth crypto and fintech businesses with secure and scalable digital asset custody.”
The tokenization features will allow customers to bring to the XRP Ledger blockchain many real-world assets, such as fiat currencies, commodities, or real estate. These tokenized assets can later be traded on the XRPL’s native decentralized exchange that promises an efficient and low-fee experience.
As per the company’s announcement, selected clients will be able to access new compliance features starting December 2024, and general availability is expected to roll out in early 2025. Pre-configured policies will be available early next year as well.
According to Ripple, custody is a blossoming market within the crypto industry, as the amount of digital assets custodied is expected to reach $16 trillion by 2030, with around 10% of the global GDP being tokenized by that time. Gambling on these opportunities, the company, in its own words, has recorded a 250% year-over-year new customer growth, scoring some high-profile deals with BBVA Switzerland, Societe Generale-Forge, DBS, Rulematch, Archax, and Futureverse.
This move to expand into custody services marks a strategic diversification for Ripple, as the company hopes to capture a sweet share of the growing digital asset management market. However, Ripple is likely to face fierce competition from established players in the sector, including Coinbase, Gemini, Fireblocks, and Anchorage Digital, all of which have already scored major institutional clients and released flagship products.
The push for diversification comes amid the heated battle over the status of XRP, which has been the subject of a legal dispute with the SEC since 2020. The regulator alleges that the sale of tokens constituted an unregistered security offering, which Ripple vehemently denies. On Thursday, Ripple filed the notice of cross-appeal, in response to the agency appealing a 2023 court ruling that XRP retail sales should not be considered a security.
