The American company Ripple, issuer of the XRP cryptocurrency, announced its plans to launch its own stablecoin based on the US dollar. In a statement, Ripple President Monica Long indicated that the stablecoin will initially launch on the Ethereum network, as well as the XRP LEDGER network. As planned, the stablecoin “will use the native functionality of XRPL and the standards of ERC-20 tokens.” Additionally, there are plans “to expand into additional networks and decentralized finance protocols and applications over time,” according to the company.
According to Long, the Ripple stablecoin will be a “critical entry point” for greater institutional and decentralized finance use cases . In his opinion, the stablecoin will add “confidence to XRPL and drive further adoption and development.”
The digital asset will be issued by the end of 2024, according to the official announcement. It is expected to be backed by dollar deposits, short-term US government treasuries and other cash equivalents. These reserves are common in the largest stablecoins on the market, USD Tether (USDT) and USD Coin (USDC). The company maintains that the reserve assets “will be audited by a third-party accounting firm, and Ripple will publish monthly certifications.”
According to Ripple's chief technology officer, David Schwartz, the stablecoin will have a positive response from the company's customers, as well as the global market.
XRP Ledger is the network where the XRP cryptocurrency comes to life. It is a public and decentralized network launched in 2012, through which developers have created a variety of applications and solutions such as micropayments.
Stablecoin for small and medium businesses
For Schwartz, the new stablecoin could have a place in small and medium-sized companies, in addition to non-banking financial institutions, such as payment companies. As he sees it, he hopes it can boost institutional adoption of the Ripple stablecoin “which has been lacking both due to regulatory issues and the lack of someone to package something as a product,” he said.
Brad Garlinghouse, CEO of Ripple, thinks something similar, for whom the launch of the stablecoin “drives more use cases, liquidity and opportunities for developers and users.”
With its announcement, Ripple demonstrates its intention to enter the cornered stablecoin market, currently valued at around $150 billion (according to that company's estimates) and dominated by USDT and USDC.
For them, “there is a clear demand for stablecoins that offer trust, stability and utility.” And that is why they seek to launch a product that “meets the growing demand by taking advantage of the experience in creating financial solutions.”
Following the announcement of Ripple's stable cryptocurrency, the crypto asset XRP reacted upwards:
In a matter of minutes it shot up 7% after going from USD 0.57 to USD 0.61. At the close of this report, that currency is trading for USD 0.59, according to data from CoinMarketCap.
