Ripple’s Escrow Mechanism Clarified as XRP Holdings Decline Amid Decentralization Push

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Ripple’s Escrow Mechanism Clarified as XRP Holdings Decline Amid Decentralization Push

Crypto attorney Bill Morgan recently offered insights into Ripple’s escrow system, describing it as a sign of responsible management of XRP reserves. In a post on X, Morgan shared his view on how Ripple’s escrow structure reflects careful control over XRP, which continues to decrease as Ripple’s holdings decline. His explanation provided context for community debates on the escrow’s effect on XRP’s price and market dynamics.

Morgan’s comments stem from discussions within the XRP community regarding Ripple’s ongoing control over a substantial portion of XRP’s supply. The U.S. Securities and Exchange Commission (SEC) aimed at the escrow system in its lawsuit against Ripple, arguing that it is one of the multiple ways it manipulates XRP’s price. However, Morgan also explained that contrary to what the XRP community members think, escrow is not a way of pegging the price of XRP but rather a mechanism of controlling the amount of XRP in the market.

Also Read: Ripple CTO Explains Co-Founder Jed McCaleb’s Absence in SEC Lawsuit Amid Renewed Legal Tensions

Ripple’s XRP Holdings See Notable Decline

Morgan also pointed to a sharp decrease in Ripple’s XRP holding recently. He pointed out that Ripple now owns less than 39 percent of unissued XRP, down from 55 percent in 2020. This trend indicates that Ripple has been continuously relinquishing control of the XRP supply, and that is music to the ears of concerned community members and critics who argue about controls and decision-making power over the asset.

Ripple’s opponents have criticized its annual holdings, arguing they equate to ownership concentration and contradict XRP’s future use. This sentiment has been heightened, especially given the ongoing legal battle with the SEC, where some users believe Ripple could greatly determine the future value of XRP. Nevertheless, Morgan’s comments and Ripple’s reduced number of owned XRP coins might indicate the movement toward the decentralized community.

As Ripple’s escrow management and reduced XRP holdings continue to unfold, the insights shared by Morgan could support confidence among XRP holders and encourage broader crypto community engagement. This gradual shift toward decentralization may bolster the appeal of XRP, helping attract new users and potentially fueling adoption within the digital asset space.

Also Read: Here is the Latest Update in the Ripple vs SEC Lawsuit