The stablecoin market is expected to reach a high of $3 trillion in the next four years. As the role of stablecoins in global finance becomes increasingly more pronounced, Ripple is announcing its plans to launch a stablecoin, pegged 1:1 to the US dollar (USD) and backed 100% by US dollar deposits, short-term US government treasuries, and other cash equivalents.
While talk of stablecoins may seem like another phase of buzzworthy crypto news, this particular digital asset can add major value as an entry point for legacy financial systems to connect to the world of decentralized finance (DeFi), ultimately driving a wave of new use cases. Additionally, leveraging a trusted, enterprise-grade stablecoin alongside XRP in Ripple Payments will support greater liquidity and enable global on/off ramps to service cross-border payments demand at scale.
The stablecoin market has reached about $150B, but the diversity of stablecoin issuers is still lacking. The global financial system is experiencing a unanimous increase in demand for stablecoins that offer real-world value centered around utility, liquidity and trust.
The move to issue a USD-backed stablecoin, alongside a compliance-first approach to building a superior cross-border payments solution, has positioned Ripple as a solid bridge between traditional finance and digital assets, where others offer tightropes.
“Institutions entering this space are finding success by partnering with compliant, crypto-native players, and Ripple’s track record and resiliency speak for itself as we launch new products and acquire companies through multiple market cycles,” said Brad Garlinghouse, Ripple CEO.
For some time now, Ripple has leveraged a combination of assets — including XRP, fiat, and stablecoins — in the flow for Ripple Payments in order to provide the best experience for its global customers. In emerging markets, there’s demand for stablecoin payouts in lieu of the local fiat currency. Leveraging this stablecoin and XRP will improve the overall payments experience for customers around the world.
In parallel, the XRPL ecosystem has sought out a credible stablecoin to unlock new opportunities for institutional and DeFi use cases across a variety of industries.
“The XRP Ledger’s native capabilities, including a decentralized exchange and automated market maker, were built to utilize XRP as the bridge asset. Bringing a trusted stablecoin onto XRPL will drive more adoption and development, contributing to a vibrant ecosystem,” shared Monica Long, Ripple President.
The core benefits of Ripple’s stablecoin include:
Enterprise-Grade: Ripple specializes in blockchain-based enterprise grade solutions that financial institutions and enterprises need. Ripple will leverage both XRP and the stablecoin in its payment solution to further improve the customer experience and serve as the first enterprise use-case of the asset at scale.
Compliance-First Mindset: Ripple is committed to regulatory compliance and has a growing license portfolio in key regions around the globe. The company and its subsidiaries collectively hold a New York BitLicense, nearly 40 money transmitter licenses across the US, a Major Payment Institution License from the Monetary Authority of Singapore, and a Virtual Asset Service Provider registration with the Central Bank of Ireland. Earlier this year, Ripple agreed to acquire Standard Custody, one of the few crypto companies that holds a NY Trust Charter, to expand its license footprint to better serve enterprise customers.
Liquidity on the Decentralized Exchange (DEX): While XRP is the native currency on the XRPL, the Ledger was built to support any type of asset issued to trade on the DEX and quickly settle anywhere in the world with low transaction costs. Bringing more credible assets on the DEX, such as Ripple’s stablecoin, will drive numerous benefits for users, developers, and apps.
Transparent Stablecoin Reserve: Backed by a 1:1 reserve of cash and cash equivalents, Ripple's stablecoin is designed to ensure transparency and reliability. Once the stablecoin is available, Ripple will publish monthly attestations of the assets.
Multichain Compatibility: The Ripple stablecoin will be issued on the XRP Ledger and Ethereum blockchain using XRPL native functionality and ERC20 token standards. Developers on both XRPL and ETH will be able to incorporate the Ripple stablecoin so that users can transact with stability, confidence, and trust. The Ripple stablecoin will expand native issuance to other blockchains, allowing users to benefit from cross-chain interoperability.
By leaning into the capabilities that this digital asset provides, like increased liquidity and further improving the customer experience, Ripple can continue to solidify its role as the leading provider of enterprise blockchain and crypto solutions.
For more information on Ripple’s stablecoin, please reach out to stablecoin@ripple.com or contact our team today to get started on your blockchain strategy.
