XRP News: Ripple’s Q3 Report Draws Criticism Over Escrow Strategy

• Ripple’s Q3 report has elicited strong emotions in the XRP community after revealing Ripple’s escrow reserve dropped to 38.9 billion XRP, representing 38.9% of the token’s total supply. 
• Five years after Ripple was launched, Ripple Labs decided to secure 55 billion XRP in XRPL-based escrow accounts as a measure to control the XRP supply and ensure price stability.

The company behind the XRP digital asset, Ripple Labs released its Markets Report for the third quarter of the year on the first of November. According to the report, the amount of XRP in Ripple escrow’s reserve has aggressively dropped to 38.9 billion from the 55 billion coins initially locked in 2017. 

As of September 30, 2024, Ripple had liquid XRP holdings of $4.43 billion. Additionally, the escrow reserve contained $38.9 billion XRP on the same date. This Q3 report has sparked significant discussion within the XRP community, particularly concerning the escrow reserve.

What You Need to Know about Ripple Escrow

For context, Ripple escrow refers to a mechanism used by Ripple Labs to manage the supply of its cryptocurrency, XRP. When Ripple was created, a significant amount of XRP (100 billion XRP in total) was minted at the outset. 

Afterward, Ripple allocated a large portion of XRP into several escrow accounts. These accounts are controlled by smart contracts that automate the release of XRP. On the first day of each month, $1billion XRP is released. At its core, the escrow mechanism is designed to enhance transparency and predictability regarding the supply of XRP, thus maintaining investor confidence.

The XRP community has reacted to a post on X by Bill Morgan the pro-XRP lawyer. He explained in detail the significance of the reduction observed in Ripple’s escrow reserve. Attorney Morgan stated that the SEC, in its lawsuit, claims that Ripple uses its escrow strategy to artificially inflate the price of XRP, implying that a decrease in the circulating supply could trigger a significant price increase. 

Well the SEC in the lawsuit asserted the escrow was one of several measures Ripple took to buttress the price of XRP. Many in the XRP community believe it suppresses the price of XRP but that seems wrong for dozens of reasons. Ripple messaging is that the escrow shows its… https://t.co/RzzNlNxSnl

— bill morgan (@Belisarius2020) November 3, 2024

On the other hand, Morgan pointed out that some XRP supporters incorrectly assert that Ripple’s escrow reserve depresses the coin’s price. He emphasized that the depletion of Ripple’s escrow reserve demonstrates the firm’s responsible management of its considerable yet gradually diminishing XRP holdings.

The ongoing SEC vs. Ripple case continues to be a significant factor affecting XRP’s price fluctuations, in addition to the escrow issue. If Ripple faces a negative outcome in this case, it could lead to XRP being delisted in the U.S., casting doubt on the potential for an XRP spot ETF. On the flip side, the approval of an ETF could trigger an influx of institutional investment setting up the token for a parabolic rally.

Currently, XRP has a circulating supply of 56.86 billion, accounting for 56.87% of the total supply. At present, XRP is trading at $0.5122, reflecting a 1.97% increase over the last 24 hours.