Ripple intends to unveil a stablecoin linked to the US dollar later this year, aligning with projections indicating that the market is poised to exceed $2.8 trillion by 2028.
According to Ripple’s announcement on Thursday, the stablecoin will be fully backed by US dollar deposits, in addition to short-term US government treasuries and other equivalent cash holdings. Ripple emphasized that these reserve assets will undergo auditing by a third-party accounting firm, with monthly attestations to be published by the company. However, Ripple did not specify the identity of the auditing firm.
This strategic move positions Ripple as a contender against established leaders in the stablecoin arena, such as Tether and Circle. Notably, PayPal joined the competition last year with the introduction of its own USD-backed stablecoin, PayPal USD (PYUSD), on the Ethereum network.
1/ The stablecoin market is booming – around $150B today, and projected to soar past $2.8T by 2028. There's a clear demand for trust, stability, and utility.
That's why later this year we’re launching a stablecoin pegged 1:1 to the USD on the XRP Ledger and Ethereum.…
— Ripple (@Ripple) April 4, 2024
According to Tether co-founder William Quigley in an interview with Cryptonews, achieving dominance in the stablecoin market, particularly outside the United States, would be a challenging feat for PayPal. However, PayPal’s stablecoin currently holds the 12th position globally, with a market capitalization of $190 million.
Stablecoins constitute a unique category of cryptocurrency engineered to maintain minimal price fluctuations. This stability is achieved by tethering their value to external assets, such as traditional fiat currencies or financial instruments.
Consequently, stablecoins offer a considerably less volatile option compared to established cryptocurrencies like Bitcoin and Ethereum. This characteristic makes them particularly appealing to risk-averse investors seeking a more stable investment avenue.
The XRP Ledger Receives Enhancement Through the Introduction of a Stablecoin
Ripple CEO Brad Garlinghouse emphasized that institutions venturing into the stablecoin market are finding success by collaborating with compliant, crypto-native entities. He highlighted Ripple’s robust track record and adaptability across various market cycles, underscoring the company’s resilience as it introduces new products and acquires companies.
Moreover, Garlinghouse noted that Ripple’s initiative not only bolsters the stablecoin market but also catalyzes the emergence of more use cases, liquidity, and opportunities for developers and users alike.
Ripple’s stablecoin will initially debut on the XRP Ledger (XRPL) and Ethereum (ETH) blockchains. However, Ripple envisions expanding its accessibility to additional blockchains, decentralized finance (DeFi) protocols, and diverse applications in the future.
The decision to launch on both XRPL and Ethereum is strategic, as it enables cross-chain interoperability, a pivotal feature for facilitating seamless interactions between different blockchain networks. This interoperability ensures enhanced efficiency and accessibility while fostering broader adoption and utilization of Ripple’s stablecoin across the digital asset ecosystem.
Rising Demand for Ripple’s Stablecoin Payouts Fueled by Emerging Markets
Ripple is strategically planning to incorporate both XRP and its stablecoin into its payment solutions, with the primary objective of elevating customer experience and pioneering the first extensive enterprise use case for the asset. Particularly noteworthy is the keen interest expressed by Ripple’s clientele in emerging markets regarding the facilitation of stablecoin payouts.
While the initial rollout is purportedly focused on the US market, Ripple remains open to the prospect of introducing tailored variations for other regions such as Europe and Asia. This adaptive approach underscores Ripple’s commitment to catering to diverse market needs and maximizing the utility of its payment solutions on a global scale. As the demand for efficient and cost-effective cross-border payments continues to surge, Ripple’s efforts to integrate both XRP and its stablecoin signify a significant step towards revolutionizing the digital payments landscape and addressing the evolving requirements of businesses and consumers worldwide.
read more about: Ripple unveils two major technical advancements for the XRP Ledger
