Banks are currently facing significant challenges in holding XRP due to Basel III regulations, which impose a 1,250% risk weight on the cryptocurrency. This requirement forces banks to maintain $12.50 in capital for every $1 of XRP exposure, making it capital inefficient for institutional on-balance-sheet holdings. The XRP community is advocating for a reclassification that could potentially ease these capital requirements, allowing banks to hold XRP more feasibly. Such a regulatory shift could pave the way for increased institutional adoption of XRP, contingent on achieving legal clarity and regulatory consensus. Additionally, capital gains tax considerations remain a factor in institutional asset selection.