XRP could become a potential go-to tool for FX hedging amid the growing need to hedge against FX fluctuations among corporate treasuries.
For context, foreign exchange (FX) hedging is a practice that helps companies and investors manage the risks that come from currency fluctuations. It protects profits and stabilizes costs when exchange rates move unexpectedly. The main goal is to reduce exposure to volatile exchange rates that could disrupt international operations.
The Growing Trend of FX Hedging
Notably, companies use several tools to hedge against FX risk. One such tool is forward contract, which lets two parties lock in a future exchange rate. For instance, a U.S. company expecting €1 million in six months can secure today’s USD/EUR rate to avoid losses if the euro weakens.
Firms could also use options and futures contracts for this practice. Ultimately, FX hedging helps companies stabilize cash flow and plan more accurately for international operations. However, it also involves costs, such as option premiums and contract fees, and can lead to missed profits when currency movements turn favorable.
Recent data shows that FX hedging is growing worldwide. Remarkably, in Europe, corporate FX hedging jumped from 67% in 2023 to 86% in 2024, driven by higher currency volatility, according to MillTechFX’s Key Global Trends in Corporate FX Hedging for 2025 report. In the U.S., companies hedged 48% of their currency exposure in the second quarter of 2024, up from 46% in the first.
Moreover, MillTechFX’s Corporate Hedging Monitor also revealed that more than 75% of firms in the U.K. and U.S. suffered FX losses in 2024 from unhedged exposure, leading to over half of them rethinking their strategies.
How Could XRP Work as an FX Hedging Tool?
Interestingly, some crypto industry leaders have now begun highlighting crypto assets like XRP as potential tools for FX hedging. Practically, XRP could act as a hedge against FX fluctuations by being a bridge for instant settlements between currencies.
If a company converts U.S. dollars into XRP, transfers them within three to five seconds via the XRP Ledger (XRPL), and then converts them into euros, it can avoid multi-day exposure to fluctuating exchange rates.
In addition, companies can also hedge XRP’s own volatility using CME XRP futures and options. Meanwhile, XRP-based liquidity pools on the XRPL also allow direct FX conversions such as XRP-EUR, helping reduce slippage and hedge multi-currency exposure.
XRP Price if Corporate Treasuries Use it for FX Hedging
However, XRP’s high volatility, between 50% and 100% annually, still requires active risk management through derivatives. If corporate treasuries do adopt XRP for FX hedging, the impact on price could be tremendous.
At the moment, XRP trades at $2.63 with a market capitalization of $158.45 billion. To explore how corporate adoption for FX hedging might affect its price, we asked Google Gemini for a hypothetical projection.
According to Gemini, the BIS estimated total outstanding FX derivatives at around $130 trillion by mid-2024. For its model, the chatbot used a rounded figure of $100 trillion and an estimated circulating supply of 60 billion XRP.
Gemini built a bullish model where XRP captures 15% of the global corporate FX derivatives market. Notably, this would mean XRP supports $15 trillion worth of notional value.
It then assumed a 1:1 ratio between market cap and the notional value it backs, which meant that XRP’s market cap would also need to reach $15 trillion. With 60 billion XRP in circulation, this would translate to a price of about $250 per token.
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