Standard Chartered has deepened its push into stablecoin infrastructure by launching custody support for Ripple USD (RLUSD) on the XRP Ledger, with the service now available to eligible institutional traders through the bank's branch in the Dubai International Financial Centre (DIFC). The bank is also negotiating with Ripple and LMAX Group on a wider collateral integration that would, if completed, allow institutions to trade with RLUSD without transferring the tokens to a trading venue.

According to the announcement, RLUSD's listing on the XRP Ledger is now covered under Standard Chartered's institutional custody program. RLUSD runs on the XRP Ledger, a blockchain platform designed to deliver fast, low-cost settlement for decentralized finance (DeFi) applications.

Institutional-Grade Custody Now Live on XRPL

Standard Chartered's digital asset custody infrastructure now enables eligible clients to hold RLUSD. The service is offered through the bank's DIFC branch, which is regulated by the Dubai Financial Services Authority, giving institutions an additional route to the token alongside crypto-native custodians.

Standard Chartered said the move targets institutions seeking access to digital asset markets without compromising on institutional-level practices for long-term custody, governance and risk management.

RLUSD Could Stay in Custody While Backing Trades

The most noteworthy element of the three-way program is the envisioned cross-collateral model. Standard Chartered and LMAX Group plan to enable RLUSD to qualify as collateral for the bank, making it eligible for specific products and trading services.

Under the proposed design, clients would not be required to transmit their RLUSD to the trading platform. Instead, LMAX would be reimbursed by Standard Chartered for the value of the eligible collateral, with the underlying tokens remaining in the bank's custody. The setup echoes collateral arrangements long used in conventional markets, where pledged assets stay with a custodian rather than moving onto the trading venue itself.

Keeping the tokens in bank custody throughout the trade lifecycle is designed to mitigate the operational risks associated with frequent asset transfers and to give institutions greater control over counterparty exposure.

Ripple and LMAX Target More Efficient Stablecoin Collateral

Collateral mobility may matter to institutions as much as custody itself. Once the planned integration goes live, companies would potentially be able to keep RLUSD and apply its value across the LMAX trading infrastructure, supporting trading activity while the tokens remain held at the bank.

That could improve capital utilization by eliminating the need for entities to shift funds from platform to platform. "The true use cases for the ripple are where institutions want stablecoins to operate within a known and regulated financial environment," said Ripple.

Collateral Functionality Not Yet Live

While the custody service is already in place, the RLUSD collateral functionality remains in development at LMAX. Final documentation, successful testing, regulatory requirements, internal approvals and jurisdictional readiness must all be settled before the companies begin implementation. Progress on that checklist will signal when — and in which jurisdictions — RLUSD could move from a stored asset in bank custody to working collateral across a trading venue.

If completed, the partnership would bring together three separate pieces of infrastructure: Ripple's stablecoin and the XRPL settlement layer, Standard Chartered's institutional custody platform and LMAX Group's trading marketplace. It would move RLUSD into more direct involvement in institutional trading and collateral management, rather than leaving the stablecoin limited to payments and settlement.

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Sources: CryptoNinjas · Standard Chartered press release