FedNow Contributor Explains How Banks Could Use XRP

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Crypto analyst STEPH IS CRYPTO has shared comments from FedNow contributor Jess Cheng that described how banks could reportedly use XRP to facilitate cross-border settlements without relying on traditional intermediary banking relationships.

In a recent tweet, STEPH IS CRYPTO described the remarks as significant, writing that Cheng explained “how banks could use XRP for cross-border settlement” in what was described as an “off-the-record” video. The post focused on Cheng’s explanation of how financial institutions could use XRP as a bridge asset between two separate banking systems.

The comments centered on a hypothetical scenario involving two institutions, Alphabank and Betabank. According to Cheng, banks often rely on a common account holder or intermediary institution to move funds across borders. However, she said there may be another option that removes the need for that arrangement.

XRP Presented as a Bridging Tool Between Banks

During the explanation, Cheng said banks could use XRP as a “bridging tool” to connect payment systems directly. She described XRP as a digital asset native to the Ripple Consensus Ledger and explained that it could help bridge settlement gaps between financial institutions operating in different jurisdictions.

Cheng contrasted the XRP-based process with traditional fiat-based payment chains, where every stage of a transaction depends on national currencies and intermediary relationships. In her example, Alphabank and Betabank could instead use virtual currency only at the settlement layer, while customers continue transacting in local fiat currencies.

The scenario involved a Brazilian company, Alphacorp, making a payment to a Thailand-based company, Betacorp. Cheng explained that the Brazilian real would be withdrawn from the sender’s bank account while the Thai baht would be deposited into the receiver’s account. The challenge, according to her explanation, is how the two banks would settle obligations when they do not share a direct banking relationship.

Example Focuses on Emerging Market Transactions

Cheng stated that this type of system could be particularly useful for banks supporting emerging markets. She explained that it may be difficult to find institutions with correspondent accounts in both Brazil and Thailand, especially when handling less common currency corridors.

According to the explanation, Alphabank could hold XRP while Betabank agrees to accept XRP as settlement for the transaction. The balances would then be recorded on a distributed ledger associated with the Ripple Consensus Ledger.

She further stated that both banks could agree commercially that payment is completed once a certain amount of XRP is transferred from one institution to the other. Cheng added that the banks would effectively determine an exchange rate between XRP and the fiat currencies involved in the transaction.

XRP’s Banking Use Case Continues to Draw Attention

The video excerpt shared by STEPH IS CRYPTO has gained attention within the digital asset community because it discusses XRP in the context of institutional settlement and international banking operations.

Supporters of XRP have long argued that the asset’s primary utility lies in helping financial institutions move value quickly across borders while reducing reliance on pre-funded accounts and multiple intermediaries.

Although the comments referenced a hypothetical example rather than an announced implementation, the clip has renewed interest in XRP’s potential role in cross-border payment infrastructure and bank-to-bank settlement systems.

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