In Brief:
- Ripple invests in ZILO and Licuido to enhance tokenized finance on its blockchain.
- The moves aim to improve regulated transfer agency services and collateral mobility on the XRP Ledger.
- These investments align with Ripple’s ongoing strategy in institutional capital markets.
Ripple expands tokenized finance through strategic investments
Ripple made headlines on August 3 by investing in two UK firms—ZILO, a transfer agency company, and Licuido, an FCA-regulated tokenization platform. While financial terms remain undisclosed, the investments are projected to augment regulated transfer agency, issuance, and collateral mobility within Ripple’s infrastructure on the XRP Ledger.
This initiative is a continuation of Ripple’s focus on institutional capital markets. Both firms were instrumental in Ripple’s first live tokenized fund, framing a core idea: true value lies not solely in asset tokenization but in functionality for institutions afterward.
Role of ZILO and Licuido
ZILO plays a crucial role in digital transfer agency services, maintaining official records of share ownership for funds. Its platform caters to tokenized share classes, ensuring smooth transitions as funds adopt blockchain technologies. The company has raised approximately 58.7 million USD in equity funding.
Conversely, Licuido’s FCA-regulated platform manages the issuance and distribution of traditional assets, enabling them to act as digital collateral via on-chain atomic settlement. This allows institutions to utilize tokenized fund shares for collateral instead of liquidating them.
Addressing idle collateral
Ripple intends to tackle the issue of idle collateral by allowing tokenized funds to serve as collateral immediately upon issuance. Nigel Khakoo, a senior executive at Ripple, stated, “Tokenization of assets is only the starting point,” adding that the focus should be on the ability to transact, settle trades, or leverage tokens for borrowing and lending.
Ripple’s infrastructure integrates issuance, custody, collateral utility, and multi-currency transactions. The RLUSD stablecoin is pivotal for settled delivery-versus-payment transactions, ensuring the cash movement in tokenized trades uses a dollar stablecoin. Ripple has cited cooperation with firms like Aviva Investors and Franklin Templeton as evidence of institutional engagement with tokenized fund structures.
Tangible impact with live fund launch
The investments are not merely theoretical. ZILO and Licuido contributed to the Aviva Investors fund, which was launched on the XRP Ledger on July 29, transforming a previous partnership into operational reality.
Notably, the underlying portfolio remains with a custodial bank, leaving traditional regulatory frameworks intact while using XRP Ledger tokens to signify share ownership. Ripple defined the token standard, with ZILO and Licuido supplying essential services, underscoring their importance in Ripple’s tokenized fund ecosystem.
Infrastructure groundwork amid market challenges
The recent transactions enhance the XRP Ledger’s offerings but don’t inherently generate demand for the XRP token, since settlement utilizes RLUSD. No specific transaction volumes or new clients have been disclosed, making the initial impacts more about establishing infrastructure than demonstrating extensive adoption.
With XRP currently trading around 1.07 USD—down significantly year-to-date—these transactions fit Ripple’s ongoing efforts to develop the XRP Ledger amid regulatory challenges, providing institutional-grade infrastructure.
Relevance for web3 gaming
Though primarily focused on capital markets, this infrastructure bears significance for onchain gaming. As web3 games increasingly incorporate tokenized assets and stablecoin settlements, the frameworks Ripple is developing will facilitate real-world value transactions within game economies. Guilds have already tested using in-game NFTs as collateral, indicating a move towards utilizing such structured systems.
As tokenization matures on finance-specific ledgers, these developments could pave the way for game studios to adopt compliant methods for onchain value. Ripple’s investments in ZILO and Licuido may target institutional finance now, but they lay a foundation that will ultimately support the evolution of web3 gaming.
