By design, Ripple's XRP is considered the best well-established cryptocurrency for banking institutions, especially for cross-border remittance services. However, despite high compliance levels and well-developed new financial products by Ripple, banks have remained rigid on XRP.
By 2020, early investors expected XRP to have mass adoption and increase exponentially in value, but the reality is different.
Not only are new institutional investors overlooking XRP in the cryptocurrency market, but banks are also apparently unprepared or unwilling to incorporate XRP as a bridging service.
According to Ripple CTO David Schwartz, Ripple's disappointing adoption rate stems from a number of discernible roadblocks. He pointed this out during an exchange with the Ripple community citing XRP's expected underperformance in 2021.
“I think there is a combination of obstacles. Regulatory uncertainty, last mile problems, fear of retaliation from existing partners ”.
XRP Faces Low Product Adoption Momentum
In addition to the hostile crypto regulatory framework and especially in the US, Schwartz said that Ripple's best clients are waiting for more banks to bring in remittance clients.
“Another great thing is that the best customers are those who are going to use bridge assets to build new products. They are very motivated to see the projects through to completion and will bring the benefits to the clients. "
However, due to low adoption, as banks prefer to use more familiar and well-known traditional remittance services, full products on Ripple will continue to have less traffic.
“Even when they are 100% ready to go, they still have 0 customers because the product is new. So it's slow to get momentum. "
Furthermore, Schwartz declared a high dependence of XRP, as a new product, on the willingness of banks to adopt cryptocurrencies.
But with Ripple's plan to exit the US market for friendlier cryptocurrency regulatory jurisdictions in Europe or Asia, Schwartz added that XRP might not have to wait until more banks express an interest in using cryptocurrencies.
"We were going to sit around and wait for banks to adopt digital assets on their own initiative."
XRP left out by PayPal
The fourth cryptocurrency by market capitalization has also had a difficult year, following a 27% return to date and a 18.6% drop on the year.
It has also been left out of last week's price rally for top digital assets after Paypal excluded it from its cryptocurrency offering announcement.