Will Ripple’s “DPB Model” Be the Key to Institutional Capital Inflows?

▲ Brad Garlinghouse, CEO of Ripple (Source: Ripple Twitter) ©Coinreaders

Ripple has proposed a new market structure called “Digital Prime Brokerage,” arguing that the current infrastructure is still insufficient for large-scale institutional participation.

According to investment outlet FXStreet on February 27 (local time), Ripple stated in a white paper titled “The Blueprint for Institutional Digital Assets Trading” that the current cryptocurrency market does not yet match mature financial markets in terms of settlement, credit, and risk management. Ripple asserted that expanding large institutional participation will require a Digital Prime Broker (DPB) model based on centralized credit intermediation, unified liquidity, and T+1 net settlement.

Reece Merrick, Ripple’s Managing Director for the Middle East and Africa, said on X that “the bridge between traditional finance and digital assets remains unstable,” adding that the current structure—where multiple exchanges and bilateral risks must be managed simultaneously—effectively imposes an “inefficiency tax” on capital. The DPB model aims to simplify complex multilateral relationships into a one-to-one contractual framework, thereby reducing legal, compliance, and settlement risks.

The white paper analyzed the current over-the-counter (OTC) crypto market as being structurally inefficient compared to the foreign exchange (FX) market. It explained that execution, custody, and credit functions are bundled together, collateral is fragmented across exchanges, and institutions must maintain multiple bilateral agreements. Ripple identified overlapping credit risk, trapped capital, and fragmented asset risk as key sources of friction.

It particularly highlighted capital efficiency issues. The current market primarily uses gross settlement or prefunding methods, resulting in repeated intraday asset transfers and collateral locked on exchanges. For example, if 100 BTC are purchased and 80 BTC are sold within the same cycle, a T+1 net settlement model would require settlement of only 20 BTC, reducing total fund movements by approximately 89%. Ripple also noted that some overseas exchanges and liquidity providers apply swap rates of around 11%, which is about 7 percentage points higher than the risk-free rate, resulting in daily funding costs of approximately $192 per $1 million. The DPB model, it argued, should make such costs transparent rather than embedding them in spreads.

XRP (Ripple) was not the central focus of the white paper but was mentioned as part of the infrastructure. Ripple explained that the XRP Ledger could support early settlement through on-chain credit lines prior to T+1 net settlement and could be structured to clearly charge costs to parties requesting early liquidity. However, the paper’s conclusion is clear: for the institutional market to function like mature financial markets, market structure must be redesigned before token prices. XRP is currently trading at $1.37.

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