Japan Banks May Lead the First Major XRP Adoption Test: Portfolio Manager

Portfolio Manager and CFA Michael Gayed says Japan may become the first place where banks fully test XRP in real financial systems

Notably, Japan’s recent decision to raise interest rates for the first time in years has led to discussions about the reverse yen carry trade, pushing some analysts to consider whether XRP can help ease the pressure created by this development.

Amid the ongoing discussion, Gayed recently presented why Japan’s banking sector has now entered a unique position that fits Ripple’s long-term plans for XRP. In a Substack article, Gayed noted that he believes Japan now has one of the clearest setups for large-scale XRP use.

According to him, three major factors are coming together at the same time: Japan’s strong demand for cross-border payments, its long history with the yen carry trade, and its clear digital-asset rules. To Gayed, these elements naturally match the type of infrastructure Ripple has built over the years.

Japan in Asian Remittances

He first called attention to Japan’s major role in Asian remittances. Specifically, millions of people send money from Japan to the Philippines, Vietnam, Indonesia, and other Southeast Asian countries every year

Gayed explained that foreign workers rely on these transfers to support their families and that Japanese companies maintain deep business ties across the region. Because these payments move large volumes and run on predictable schedules, they feel the impact of delays and unnecessary costs more than most corridors.

Gayed argued that traditional banking systems still slow these transfers down. Notably, banks depend on older methods such as SWIFT messages, bilateral account setups, and pre-funded Nostro accounts

He said these methods create delays, add costs, and divert money that banks could use elsewhere. To him, this makes Japan’s remittance market a perfect testing ground for Ripple’s technology.

XRP Already Has a Place in Japan’s Financial System

The market commentator then called attention to SBI Remit as proof that XRP already works in these settings. For context, the firm started using XRP in 2021 to move money between Japan and the Philippines, cutting down on pre-funding and speeding up settlement times.

By 2023, SBI expanded its system to allow direct payouts into bank accounts in the Philippines, Vietnam, and Indonesia. Gayed highlighted this progress to show that real banks, regulators, and customers actively use XRP-based systems, not just test them in theory.

He also explained that Ripple’s presence in Japan extends beyond remittances. Notably, through the MoneyTap consortium, dozens of regional banks use or test Ripple-supported systems for domestic transfers. Even when banks do not settle transactions with XRP, their experience with Ripple’s infrastructure makes future cross-border use easier and more likely.

XRP Role in the Reverse Carry Trade

Speaking further, Gayed then turned his focus to Japan’s financial structure. For decades, Japan kept interest rates near zero, which encouraged investors to borrow yen cheaply and invest in higher-yielding markets abroad. This trend helped influence the global carry trade and created large pools of offshore yen

Now, the Bank of Japan has started to unwind its long-standing policy. However, Gayed believes the underlying incentives and liquidity issues remain. He argued that XRP could support banks as they adjust to new interest-rate conditions and manage foreign-currency flows more efficiently.

He then mentioned the importance of Japan’s regulatory approach. Unlike many countries that still struggle to clarify digital-asset rules, Japan has spent years building a complete legal framework for cryptocurrencies, stablecoins, and tokenized payments.

According to Gayed, institutions like SBI use this clarity to develop blockchain-based services and Ripple-supported applications. Importantly, this creates an environment where banks can adopt new technology without dealing with regulatory uncertainty.

Overall, Gayed admitted that Japan does not guarantee large-scale XRP adoption, but he believes the country brings together factors that rarely appear in one place

He noted that Japan’s economic structure, active remittance channels, strong institutional partners, and clear regulations give its banks a real chance to serve as the first major test of XRP in everyday financial operations.