Ripple, the company behind XRP, the global transfer token, recently announced its plans to enter the lucrative market of stablecoins or cryptocurrencies backed by fiat assets. The San Francisco-based company plans to launch its stablecoin linked to the US dollar, which will initially be available on the Ethereum and XRP Ledger blockchains.
Unlike other controversial issuances, Ripple’s stablecoin will be fully backed by cash reserves, US Treasury bonds, and other equivalent liquid instruments. Additionally, it will implement rigorous audit mechanisms and regular reporting on its reserves to ensure transparency and user trust.
Ripple’s Bid to Compete with Tether in the Stablecoin Landscape
Executives at Ripple stated in a release that they identified an opportunity in the stablecoin market, which currently exceeds $150 billion in value and is led by Tether and its USDT stablecoin.
Ripple’s Chief Technology Officer, David Schwartz, said the company is ready to compete with dominant stablecoins like Tether and USDT, thanks to its financial strength, regulatory compliance, and licenses backing Ripple.
“We think we’re uniquely positioned to have a competitive entry in that market […] We have our presence both on the institutional side with our payments product, and on the XRP Ledger side, we have some entry into the DeFi section of the space. Those are kind of the two big buckets in which stablecoins are being used today.”
The Ripple executive added that one reason for launching a stablecoin is to provide the XRP Ledger (XRPL), Ripple’s decentralized blockchain, with another prominent asset besides XRP.
Currently, the XRP Ledger features native functions such as a decentralized exchange, issuance of custom tokens and stablecoins, and a consensus network, among other tools. Therefore, the new stablecoin could potentially gain massive adoption in the community and could be the catalyst for propelling XRP to the $3 milestone.
While final details remain undisclosed (including the stablecoin’s name), the launch is scheduled for 2024. For now, the company indicated that it will use this launch period to assess actual demand and define the next blockchains where they will launch their stablecoin in the near future.
At the time of writing, the main competitor, Tether USDT, remains in the top three cryptocurrencies with the highest market capitalization in the crypto market, with a market cap exceeding $107 billion and an immense daily volume of $65.7 billion, according to CoinMarketCap data. Therefore, Ripple will have to compete fiercely to become the new Goliath of stablecoins.
