Crypto researcher SMQKE highlights a potential game-changer for banks in meeting the Basel III liquidity rules. His analysis suggests that Ripple’s XRP could replace idle cash reserves, leading to reduced costs and increased capital efficiency. 👨💻 Under Basel III, banks are mandated to hold high-quality liquid assets (HQLA) to fulfill the Liquidity Coverage Ratio (LCR). These regulations often force banks to maintain large pre-funded nostro/vostro accounts globally—a costly and inefficient practice that locks up capital. 🚀 XRP’s Potential as a Universal Bridge Asset 🌎 SMQKE proposes that XRP can serve as a single, bridgeable reserve asset on a bank’s balance sheet. Instead of holding multiple currencies in global accounts, banks could utilize XRP for instant currency exchange and liquidity access when needed. This aligns with Ripple’s On-Demand Liquidity (ODL) model which enables instantaneous fiat currency conversion through XRP without pre-funding. 💰 Regulatory Recognition and Compliance ✅ SMQKE’s argument is bolstered by a reported Basel Committee letter dated August 19, 2025, referenced in his post. This letter confirms that XRP qualifies as a “Group 2A” crypto asset under three specific hedging-recognition tests. This classification suggests that banks could leverage XRP to meet regulatory liquidity metrics under Basel’s prudential framework. Cost Reduction and Operational Efficiency 📈 By consolidating their liquidity in XRP, banks stand to experience significant savings on foreign exchange hedging costs, treasury overhead, and payments operations teams. SMQKE’s analysis cites Ripple’s own models that estimate substantial financial gains from using XRP instead of funding dispersed nostro accounts. Dormant capital can be unlocked—banks can deploy XRP for actual liquidity rather than tying it up in low-yield cash reserves across different jurisdictions. 💰 Risks and Practical Considerations 🚨 Despite the promising potential, hurdles exist. XRP’s price volatility might deter risk-averse institutions from holding it long-term. Market liquidity must mature to enable widespread on-demand settlement capabilities. And broader regulatory certainty remains crucial—classification under Basel standards must remain consistent, and banks need to integrate this new practice. A New Era of Banking SMQKE’s insights illuminate a bold yet increasingly plausible use case for XRP: not just as a payment rail but also as a legally compliant liquidity tool. 💸 If banks embrace XRP as a universal bridge asset, they could unlock billions in capital, streamline operations, and meet Basel III’s liquidity requirements more efficiently. For Ripple, this represents real integration into the heart of modern banking. Disclaimer: This article is intended to inform and should not be construed as financial advice. Readers are encouraged to conduct thorough research before making any investment decisions. Any action taken by a reader is at their own risk. Times Tabloid isn’t responsible for any potential financial losses. ➡️ Follow us on Twitter, Facebook, Telegram and Google News The post Ripple (XRP) Can Support Banks In Meeting This Major Requirement appeared first on Times Tabloid.