XRP as a potential US crypto reserve asset: Possibilities and challenges

From Bitcoin to a multi-asset reserve: The evolution of US crypto reserve thinking

The idea of the US holding cryptocurrency in its national reserves has evolved dramatically in recent years. 

Initially, Bitcoin (BTC) was the clear frontrunner. It’s the oldest, most widely recognized cryptocurrency, and thanks to its fixed supply of 21 million coins, many see it as an ideal hedge against inflation, a kind of digital gold that governments could store as a safeguard against economic instability. 

But as the conversation has matured, so has the idea that perhaps Bitcoin alone isn’t enough. The push by some industry leaders for a broader crypto reserve, encompassing assets including (XRP), has sparked a new and equally contentious discussion.

This evolving landscape raises crucial questions about the future of digital asset integration into national financial systems and the potential implications for global finance. 

Just as traditional reserves play a critical role in economic stability, the composition of a crypto reserve could have significant ramifications for monetary policy and international trade.

The Bitcoin reserve debate

Bitcoin was initially considered as a US Federal Reserve asset due to its fixed supply and decentralization, but volatility and regulatory concerns stalled its adoption.

When people first started talking about adding Bitcoin to US reserves, it wasn’t a far-fetched idea. Corporations like MicroStrategy and Tesla already held the apex asset in their treasuries, treating BTC as a strategic asset to protect against inflation.

The argument for Bitcoin revolves around the fact that its hard-capped supply meant it couldn’t be inflated like fiat currency, its decentralized nature ensured no single entity could manipulate it, and its survival over 17 years has proved its resilience as a store of value.

As of Jan. 29, states across the US are at varying stages of establishing Bitcoin strategic reserves, with some making significant progress while others are still in the early phases. Michigan and Wisconsin stand out as notable examples, as they already hold Bitcoin through state-run funds despite the absence of public legislative endorsements. To track progress, a full orange dot in the below images indicates completed steps and a Tephra volcano symbol denotes steps currently in progress.

However, despite these compelling points, Bitcoin’s volatility quickly became a major concern. Governments tend to avoid assets that can lose 50% of their value in a few months, making Bitcoin’s notorious price swings a red flag.

How would economists react if taxpayers’ money was used to buy crypto assets that could lose value so quickly?

Regulatory uncertainty added another layer of hesitation. While the Commodity Futures Trading Commission (CFTC) classifies Bitcoin as a commodity, there is still no formal government framework for integrating it into national reserves. 

Furthermore, the environmental debate surrounding Bitcoin’s energy-intensive proof-of-work mechanism led to significant political opposition. These factors stalled momentum, forcing policymakers and industry experts to reconsider their approach. Perhaps Bitcoin alone wasn’t the answer, and maybe the US should hold a diversified crypto reserve instead.

Beyond Bitcoin: Arguments for a diversified national crypto reserve

As skepticism grew around Bitcoin, discussions shifted toward a diversified crypto reserve that could include assets like XRP and Ether (ETH).

Even as skepticism increased around a Bitcoin reserve, an alternative vision emerged: Why limit the reserve to just one cryptocurrency? The crypto market comprises thousands of digital assets, each with unique use cases. 

Just as the US already maintains a diversified reserve of assets, including gold, foreign currencies, Special Drawing Rights (SDRs) and US government debt, some began arguing that a national crypto reserve should follow the same model.

Instead of relying solely on Bitcoin, a combination of assets like XRP, ETH and stablecoins could offer a more balanced, functional financial tool. However, based on historic price action over the years, a Bitcoin-only reserve would be less volatile than a national crypto reserve.

As of Jan. 31, 2025, the US national reserves include gold, which remains the largest holding at over 8,100 metric tons. Foreign currency reserves help manage exchange rate fluctuations, while SDRs issued by the International Monetary Fund (IMF) are a flexible financial tool. 

Additionally, US government debt in the form of bonds and securities plays a significant role in the overall reserves. The idea of a diversified crypto reserve follows the same logic, allowing the government to hedge against financial instability while incorporating assets that serve different purposes.

This is where XRP enters the picture. Unlike Bitcoin, which is often viewed as a long-term store of value, XRP is built for speed and efficiency in transactions. It was designed specifically for cross-border payments, boasting settlement times of three to five seconds and negligible fees. 

If a crypto reserve aimed to facilitate government-backed global trade and financial operations, XRP would arguably be a strong contender. While XRP is likely to add higher volatility to the reserve, it is seen as a crypto asset that has survived through multiple crypto cycles, and has reflected an underlying payments infrastructure.

Possibilities of adding XRP to the US crypto reserve

XRP’s speed, low-cost transactions and existing banking integration make it an attractive option for a government-backed digital reserve.

Arguments in favor of adding XRP to the US crypto reserve include:

• XRP’s transaction efficiency: XRP’s greatest strength lies in its transaction efficiency. Unlike Bitcoin, which takes about 10 minutes per block, XRP transactions settle in seconds, making cross-border payments highly efficient. 
• Relevance to the US government crypto reserve: This speed and cost-effectiveness are precisely why Ripple has been working with financial institutions worldwide. If the US government were to hold a crypto reserve that could be used for liquidity and transactions rather than just a passive store of value, XRP would be a logical inclusion.
• Integration into banking infrastructure: Another point in XRP’s favor is its existing integration into banking infrastructure. Unlike most cryptocurrencies that operate independently of the traditional financial system, Ripple’s technology is already being tested and adopted by banks and payment providers. 
• Bridging traditional and digital finance: If a national crypto reserve were meant to bridge the gap between traditional finance and digital assets, XRP’s alignment with existing institutions would be a major advantage. 
• Mitigating volatility risk: Additionally, relying solely on Bitcoin introduces significant risks due to its volatility. A multi-asset reserve incorporating XRP and possibly other digital currencies like ETH and stablecoins could offer greater stability.

The challenges of adding XRP to the reserve

Regulatory uncertainty, centralization concerns and market liquidity issues pose significant barriers to XRP’s inclusion in US reserves.

Despite the above-mentioned benefits, XRP’s inclusion in a national reserve faces significant hurdles, including:

• Decentralization debate: The biggest challenge is the longstanding debate over XRP’s decentralization. While the XRP Ledger is decentralized in operation, critics argue that Ripple’s large token holdings give it too much control over the network. Unlike Bitcoin, which is independent of any central entity, XRP’s perceived ties to Ripple Labs have led to concerns about potential manipulation or centralization risks.
• Regulatory uncertainty: Regulatory issues also remain a significant barrier. While Ripple secured a partial legal victory in 2023 when a judge ruled that programmatic sales of XRP were not securities, the SEC still considers XRP a security in some contexts. This lack of complete regulatory clarity could make it difficult for the US government to adopt XRP in any official capacity. 
• Market capitalization and liquidity: Additionally, compared to Bitcoin’s massive $2 trillion market cap, XRP’s market cap of around $175 billion raises questions about liquidity and scalability. If a national reserve needed to liquidate assets quickly, Bitcoin’s widespread adoption and deeper liquidity pool would make it a more practical option.

Political and industry pushback further complicates the issue. Bitcoin maximalists, including influential figures like Jack Mallers and Michael Saylor, have argued that Bitcoin should be the only crypto included in national reserves. 

Also, there have been rumors of Ripple lobbying against a Bitcoin-only reserve, adding another layer of controversy to the debate. If the US were to pursue a crypto reserve, the decision to include XRP could face resistance from the broader Bitcoin community and traditional policymakers.

Could the US government one day hold Bitcoin as a store of value and XRP as a financial rail for transactions? Maybe. But for now, the debate continues, and XRP remains one of the most controversial candidates in the mix. 

The evolving regulatory landscape and institutional cryptocurrency adoption will ultimately shape whether digital assets, including XRP, find a place in US national reserves.