Ripple, the company behind the XRP Ledger, has announced its entry into the stablecoin market, a sector currently dominated by players like Tether’s USDT and Circle’s USDC.
The new stablecoin, yet to be named, will be pegged to the US dollar and is expected to launch later this year.
Ripple to Launch a Stablecoin
Ripple’s offering aims to distinguish itself by being “100% backed by US dollar deposits, short-term US government Treasuries, and other cash equivalents.” This move places a strong emphasis on security and stability.
According to Ripple, the decision to venture into stablecoins comes at a time when the market is experiencing significant growth. Indeed, projections indicate it could expand to over $2.8 trillion by 2028. The company plans to deploy its stablecoin on the XRP Ledger and the Ethereum blockchain, utilizing the ERC-20 token standard for broader compatibility and utility.
This move into stablecoins is noteworthy for the company, particularly as Ripple navigates a legal battle with the US Securities and Exchange Commission.
Brad Garlinghouse, Ripple’s Chief Executive Officer, highlighted the strategic importance of the new stablecoin. He emphasized the aim for stability and transparency, noting plans for monthly public audits by a reputable accounting firm to ensure user accountability and trust.
“Launching a stablecoin is a natural step for Ripple as we bridge the gap between traditional finance and crypto. We have the years of experience, regulatory footprint, a strong balance sheet, and a network with near global payout coverage, to offer the best of crypto-enabled payments using XRP and our (future) stablecoin together,” Garlinghouse said.
The stablecoin market has become increasingly popular among investors and traders seeking to avoid the volatility associated with traditional cryptocurrencies like Bitcoin and Ethereum. Ripple’s entry signifies a potential shift, challenging the dominance of established stablecoins such as USDT and USDC.
Read more: A Guide to the Best Stablecoins in 2024
Ripple’s approach to its stablecoin, focusing on enterprise and banking customers, reflects a compliance-first mindset. However, with USDC currently leading among compliance-focused consumers, Ripple’s stablecoin faces the challenge of establishing itself in a competitive market.
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