Hex Trust brings institutional custody to Flare’s FXRP, opening XRP DeFi to funds

Hex Trust has added a custodial pathway for FXRP (Flare’s wrapped representation of XRP) and for staking FLR, creating a regulated-style entry point for institutional and professionally managed capital into Flare-based decentralized finance. The custody provider handles the tokenized representations and transaction approvals inside its custody framework, replacing manual wallet signing with policy-driven workflows, multi-party authorization, and audit logs that align with treasury controls. That operational model lets funds allocate XRP-derived liquidity to smart-contract markets without moving balances off the XRP Ledger or running in-house signer infrastructure. Flare’s recent rollout of lending markets, implemented through Morpho’s lending architecture, establishes single-collateral, single-borrow markets that aim to contain contagion by isolating risk at the market level. Access to those vaults is initially routed through Mystic, a front-end that lists available vaults and manages deposits and borrowing; some curated vaults will be run by independent operators such as Clearstar. For institutions, the practical choices are to deposit FXRP into interest-bearing vaults or post FXRP as collateral to borrow assets like stablecoins, while retaining the original XRP ledger positions off-chain. Hex Trust’s custody integration therefore stitches institutional operational and compliance controls onto Flare’s composable primitives, potentially making curated, policy-controlled vaults accessible to asset managers, family offices, and funds. The combined design addresses two distinct barriers to institutional uptake: custody and treasury governance on one side, and market-level risk configuration on the other. Important risks remain — notably counterparty exposure to custodians, smart-contract and oracle vulnerabilities in the FAssets and Morpho stacks, and liquidation dynamics if leverage concentrates in retail-heavy collateral. Fee structures, capital-efficiency trade-offs, and curator governance will shape how much liquidity actually flows into FXRP markets. If custody-backed access scales and curated markets prove resilient, the result could be deeper FXRP liquidity and increased onchain demand for FLR through staking and network participation. Ultimately, the initiative is a practical test of whether institutional asset-management practices can be reconciled with composable onchain lending and yield products; its success will depend on secure, auditable custody operations and robust tooling for monitoring market-level risk.