XRP is undergoing a pullback after a recent surge. As global banks expand blockchain-based systems that reduce the pre-funding burden for cross-border payments without using XRP, the token's position as a settlement asset is being tested.

On Aug. 26, blockchain media outlet Cryptopolitan reported that XRP jumped 49.4 percent over the past week. It then fell 2.2 percent over 24 hours, returning to a weaker trend. The market is watching short-term price adjustment and structural changes in the cross-border payments market, seen as a core use case for XRP.

XRP has been seen as a potential intermediary asset in cross-border remittances and liquidity transfers. But as large banks such as JPMorgan and Citigroup begin to solve similar problems using their own blockchain networks and tokenised deposits, some expect XRP's differentiation could weaken.

JPMorgan is expanding that push through its in-house blockchain platform, Kinexys. In June, it expanded the currencies supported by its blockchain deposit accounts to eight: the U.S. dollar, euro, pound sterling, Australian dollar, Hong Kong dollar, Japanese yen, yuan and Singapore dollar. Clients can move funds in those accounts 24 hours a day, and exchange between different currencies can also be handled on-chain.

Under this structure, companies can make cross-border payments without buying a separate cryptocurrency as an intermediary asset. For example, if a company holding dollars must pay in yen, it can apply an exchange rate within JPMorgan's system, exchange the currencies and leave the settlement record on the blockchain, without using a separate bridge asset.

Citigroup is moving in a similar direction. Citi's 24-hour U.S. dollar clearing network is connected to more than 250 banks across more than 40 markets, and Citi Token Services tokenises commercial bank deposits so they can move on blockchain infrastructure.

Citi explained that combining the two systems would let institutions process overseas payments faster while reducing the burden of placing funds in each account in advance. The key is that liquidity needed for settlement would not have to be tied up ahead of time across multiple countries and accounts.

On speed alone, the XRP Ledger still leads. Transaction processing time in that system is about 90 seconds, slower than the XRP Ledger's 3 to 5 second settlement. But for companies, the ability to use cash they already hold within a regulated banking system could be more important than processing speed alone.

Swift's moves are also a new variable for XRP. Swift is pursuing a method that links digital deposits issued by each bank, rather than using a common cryptocurrency.

Tokenised deposits issued by banks are basically tied to the issuing bank's ecosystem. For example, HSBC's $1 token is HSBC's liability, and Standard Chartered's deposit token is also based on that bank's system. Digital assets issued by different banks are not automatically linked.

Swift is trying to solve this through messaging and settlement coordination. On the 19th, HSBC and Standard Chartered completed the first cross-border transaction using Swift's blockchain ledger.

In that transaction, the two banks kept deposit tokens in their respective infrastructures. Swift transmitted transaction messages, aligned and reconciled each bank's obligations, and calculated the amount to be paid. The final transfer of funds was carried out through existing payment systems.

This is a different approach from XRP. XRP uses a single digital asset on its own ledger to process asset transfers and settlement, while Swift chose to connect bank tokens issued on different platforms so they can interact without using a common cryptocurrency.

Swift's project is moving beyond initial tests and entering an expansion stage. Swift said 17 banks on six continents are preparing real transactions of tokenised deposits through the ledger.

HSBC is also already offering tokenised deposit services in six markets and supports offshore yuan, the Hong Kong dollar, Singapore dollar, euro, pound sterling, the U.S. dollar and the UAE dirham.

As a result, some analyses say it is difficult to view the recent XRP price adjustment as simple profit-taking. In the short term, the market is pausing after a sharp rise. Over the medium to long term, banks are increasingly using their own blockchains and tokenised deposits to directly solve the liquidity problem in cross-border payments that XRP aimed to address.

To maintain competitiveness as a settlement asset, XRP will likely need to demonstrate liquidity and usability that differentiates it from bank-led payment networks, not just fast settlement speed.