Ripple CTO Clarifies Escrow Decision and XRP Sales Restriction

TLDR

Table of Contents

Ripple’s escrow system, established in 2017, restricted XRP sales to 1 billion per month.
Before 2017, Ripple could have freely sold as much XRP as it wanted, Schwartz reveals.
Ripple CTO voted against the escrow, valuing operational flexibility over predictability.
Schwartz argues that future XRP sales are already factored into the current market price.

In a recent clarification on social media, Ripple’s Chief Technology Officer (CTO), David Schwartz, provided details about the company’s XRP sales. Schwartz addressed claims that the establishment of the Ripple Escrow system was designed to systematically dump large amounts of XRP onto the market. He noted that, contrary to this assertion, the escrow system was actually a restriction that prevented Ripple from selling as much XRP as it wanted.

Pre-Escrow Sales Flexibility

Before 2017, Ripple had complete flexibility regarding its XRP holdings. The company could sell as much XRP as it wanted each month, without any limitations. This operational freedom allowed Ripple to take advantage of favorable market conditions. However, this situation changed with the implementation of the escrow system in 2017.

Before the escrow, Ripple could have sold as much XRP as it wanted every month. And I opposed the decision to implement the escrow precisely because I didn't see enough upside to justify giving up that flexibility.
— David 'JoelKatz' Schwartz (@JoelKatz) December 25, 2025

Ripple locked 55 billion XRP into a series of escrows, with the intent to release 1 billion XRP per month. This move was designed to provide predictability and transparency to the market, offering investors more certainty about the availability of XRP for sale. According to Schwartz, this was seen as a way to prevent large, unanticipated sales that could potentially disrupt the market.

The Escrow Decision and Schwartz’s Opposition

While the escrow system has been marketed as a strategic decision for investor security, Schwartz revealed that he actually voted against it. He explained that he valued Ripple’s operational flexibility and did not believe the benefits of predictability outweighed the downside of limiting access to capital.

Schwartz acknowledged that many Ripple executives supported the escrow, but his vote was based on the desire to maintain greater control over the company’s financial decisions.

“Before the escrow, Ripple could have sold as much XRP as it wanted every month,” Schwartz stated. This statement challenges the narrative that Ripple executives were eager to lock up the tokens, as it was a decision made in part to manage market expectations.

Ripple’s Market Impact and Price Adjustments

Schwartz further discussed the current state of the XRP market, explaining that traders have already priced in the future release of XRP from the escrow. This means that the expected monthly sales of 1 billion XRP are already reflected in the current market price.

“Everything people know will happen and expect to happen should already be built into the current price,” Schwartz added, suggesting that the market has already adjusted to the future supply of XRP.

This insight is crucial for understanding the long-term dynamics of XRP’s market behavior. It implies that any future sales from Ripple’s escrow system may not have as much of an immediate impact on the price, as market participants are already prepared for these transactions.

Defending Ripple’s XRP Sales Strategy

The conversation about Ripple’s XRP sales strategy comes in the context of broader criticisms regarding the company’s influence on the cryptocurrency market. Some critics have argued that Ripple’s actions, particularly its control over the supply of XRP, contribute to volatility and manipulation. However, Schwartz’s comments suggest that Ripple’s actions were always intended to foster long-term stability rather than short-term gains.

By locking up a significant portion of XRP in escrow, Ripple has aimed to demonstrate commitment to a more controlled, predictable market for the token. This approach contrasts with other cryptocurrency projects that may not have similar measures in place to regulate the availability of their tokens.

As Ripple continues to navigate regulatory challenges and market volatility, Schwartz’s comments shed light on the company’s strategy and the rationale behind its decision-making process regarding XRP sales. The escrow system, once seen as a controversial move, appears to have been a calculated decision aimed at balancing market stability with the need for operational flexibility.