Ripple can sell rights to 35 billion locked XRP tokens, confirms the CTO.

The Chief Technology Officer of Ripple has clarified that the company retains the rights to sell or transfer its 35 billion XRP tokens in custody, even though those assets remain locked out of market circulation. David Schwartz said on Monday that, although the tokens cannot be released before their scheduled unlocking dates, Ripple can monetize the legal rights to those future payments or transfer the designated accounts to receive them.

What to know:

• Ripple has 35 billion XRP tokens in custody, representing 35% of the total supply of the cryptocurrency, but it can sell the legal rights to those tokens before unlocking them.
• The company bought XRP worth 1 billion dollars in open markets despite controlling billions in custody, which releases 1 billion tokens monthly.
• Approximately 70% of the tokens released from custody are locked up again each month, with only 30 to 90 million entering circulation for institutional use.

Custody rights can be monetized despite the lock status.

Schwartz addressed questions about the custody structure in a post on X, explaining that the 35 billion locked Ripple tokens remain inaccessible to the markets until their predetermined release schedule is activated. The difference between locked tokens and transferable rights, however, creates options that the company had not previously detailed publicly.

The discussion began when software engineer Vincent Van Code questioned how market participants compare XRP with Bitcoin. Van Code argued that Bitcoin's market capitalization calculations include coins that are lost or held permanently, making direct comparisons potentially misleading.

A community member then asked if Ripple could liquidate all of its custody position, which led to Schwartz's clarification on the company's legal flexibility with those assets.

The current ledger data shows 14,180 separate custody contracts containing 35,045,906,769 tokens. That figure represents slightly more than one-third of the total fixed supply of XRP of 100 billion tokens. Schwartz's statement indicates that Ripple could convert the future value of those tokens into present capital without triggering their release into circulation, a mechanism that separates legal ownership from market availability.

Institutional strategy and supply dynamics

Ripple's decision to purchase 1 billion dollars in XRP from open markets has raised questions about the company's approach to its existing custody holdings. Van Code highlighted that understanding this strategy could explain why retail investors continue to accumulate the token despite the significant custody overload.

The XRP Ocean team, which operates a decentralized protocol on the XRP Ledger, stated that the custody system primarily functions as a supply control mechanism rather than an indicator of adoption measures. Banks and institutional users require predictable liquidity, making the controlled release structure necessary for their participation. The custody releases 1 billion tokens each month according to a predetermined schedule.

The buying behavior of Ripple suggests a distinction between tokens designated for institutional infrastructure and those available for retail trading.

The company appears to acquire tokens from open markets for immediate use while maintaining the custody structure for authorized networks, liquidity pools, and institutional transfers. This separation keeps the dynamics of the retail market distinct from backend operations.

Community observers noted that approximately 70% of the monthly custody releases return to the locked state. The remaining 30 to 90 million tokens enter various institutional channels instead of retail exchanges. This re-locking pattern demonstrates Ripple's commitment to managing the available supply, although the mechanism allows flexibility in how the company leverages its future token claims.

Understanding the custody mechanisms in digital assets

A cryptocurrency custody operates like a smart contract with a lock-up period that holds tokens until specific conditions are met. For XRP, these contracts release predetermined amounts on scheduled dates, creating predictable supply increases that market participants can anticipate. The structure differs from traditional circulating supply because the custodied tokens exist on the blockchain but cannot be accessed or traded until they are unlocked.

Market capitalization calculations typically multiply the current price by the circulating supply, which excludes locked tokens. However, the ability to sell rights to future token releases introduces complexity in how market participants should assess dilution risk. If Ripple sold its custody claims to institutional buyers, those tokens would eventually enter circulation as scheduled, but the company would receive payment immediately.

Liquidity pools in cryptocurrencies serve as reserves that allow trading and transfers between different assets or networks.

Institutional participants often require access to large amounts of tokens for cross-border payments or settlement operations, needing dedicated supply sources separate from retail markets. This distinction helps prevent large institutional transactions from causing price volatility on public exchanges.

Final reflections

Ripple's dual approach of buying in open markets while maintaining locked custody positions reflects the complex supply dynamics of institutional cryptocurrency adoption. The company's ability to monetize custody rights without releasing tokens adds a mechanism that most market observers had not considered in their supply calculations. Whether Ripple will exercise these transfer or sell options remains uncertain, but Schwartz's clarification establishes that the legal framework allows for such actions.