Ripple initially announced plans to launch a stablecoin pegged to the US dollar. XRP
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Ledger and Ethereum blockchain.
“Issuing stablecoins on the XRP ledger and Ethereum will be a pivotal entry point that opens up new opportunities for institutional and DeFi use cases across multiple ecosystems,” Ripple Chairman Monica Long said in a statement Thursday. She said, “Bringing a trusted stablecoin to XRP promotes further adoption and development, contributing to a vibrant ecosystem.”
The company also said that the stablecoin, which is expected to launch later this year, will be backed by “USD deposits, short-term U.S. government treasuries and other cash equivalents.” “These reserve assets will be audited by a third-party accounting firm and Ripple will publish monthly attestations.”
The two dominant stablecoins currently pegged to the USD are Tether’s USDT and Circle Internet Financial’s USDC. The stablecoin market, currently valued at more than $150 billion, is expected to surge to $2.8 trillion by 2028, Ripple said in a statement.
David Schwartz, Ripple’s chief technology officer, told The Block that “in hindsight,” he and his team probably would have liked to have launched the stablecoin sooner. But he said it made strategic sense to issue this year after learning more about the market and monitoring economic factors.
“Rising interest rates have made this a much more attractive market,” he said. “There’s also been some sort of reorganization and actually Tether has been almost impossible for us because of regulatory issues. There’s too much uncertainty around it.”
He continued: “We have used USDC before and have no problems with it. We just don’t want to have just one option.”
As for USDT, the largest stablecoin by supply, JPMorgan analysts recently predicted that its use is likely to decline due to upcoming stablecoin regulations. Tether CEO Paolo Ardoino suggested that JPMorgan’s analysis was the result of jealousy over USDT’s dominant position among stablecoins. According to The Block Data Dashboard, USDT accounts for approximately $110 billion of the over $150 billion stablecoin market supply.
While Schwartz said Ripple would “love” to usurp Tether’s dominance, he sees room in the market for a variety of options, “particularly in DeFi applications where concentrated risk is a big problem.”
Ripple’s stablecoin use cases
Schwartz said Ripple believes that both the company’s customers and global markets will respond positively if it has a stablecoin that organizations can use more safely, especially the stablecoin on the XRP Ledger. “There are a lot of great assets on the XRP ledger, but they’re not really good stablecoins, and even if you did have one, you don’t want to build your business around a single option,” he said.
When asked about specific use cases, Schwartz said he thinks the new stablecoin will be attractive to small businesses and non-bank financial institutions such as payments companies.
“I really hope we can drive enterprise-level institutional adoption of stablecoins because of the regulatory issues and the lack of people to package something together as a product,” Schwartz added. “We will have the upper hand because of compliance.”
Like Tether, Ripple has also come under public scrutiny. The Securities and Exchange Commission (SEC) and Ripple have been locked in a legal battle since 2020 after accusing the company of raising $1.3 billion through the sale of XRP, an unregistered security.
Ripple said in a statement that it is committed to regulatory compliance and has a “growing licensing portfolio in key regions around the world.”
Initially, Ripple’s stablecoin will only be available on “the XRP Ledger and Ethereum network using “The company stated that there is. name.
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