Ripple Eyes Stablecoin Launch in $153B Market, Targets Regulation

Ripple to launch dollar-backed stablecoin in $153 billion market, aiming for transparency and regulatory compliance.

By Athena Xu

4/4, 09:48 EDT
Bitcoin / U.S. dollar

Key Takeaway

  • Ripple Labs Inc. announces the launch of a dollar-denominated stablecoin, entering the $153 billion market dominated by USDT and USDC.
  • The stablecoin will be backed by US dollar deposits and short-term government bonds, with monthly attestations on reserves.
  • Ripple's CEO anticipates U.S. stablecoin regulation before the presidential election, amid growing competition in the sector.

Ripple's Bold Stablecoin Venture

Ripple Labs Inc., a prominent blockchain developer, is set to launch its own dollar-denominated stablecoin, marking a significant entry into a market predominantly dominated by giants like Tether Holdings Ltd. and Circle Internet Financial Ltd. Ripple's CEO, Brad Garlinghouse, announced that the stablecoin, designed to maintain a constant value of $1, will be backed by a one-to-one reserve of US dollar deposits, short-term US government bonds, and other cash equivalents. This move places Ripple in direct competition within the $153 billion stablecoin market, which is currently led by Tether's USDT and Circle's USDC, comprising roughly 90% of the market share.

Regulatory Landscape and Market Dynamics

The introduction of Ripple's stablecoin comes at a time when the stablecoin market is witnessing increased regulatory scrutiny, particularly in Europe, with broader regulation set to arrive from July. Garlinghouse expressed optimism regarding the approval of a stablecoin bill in the US before the presidential election, highlighting the evolving regulatory landscape. Additionally, the stablecoin market is becoming increasingly attractive due to rising bond yields, which translate into higher earnings from the assets held to back the tokens. Ripple plans to ensure transparency by publishing monthly attestations on its stablecoin’s reserves, conducted by a third-party accounting firm, yet to be hired.

Strategic Expansion and Competition

Ripple's decision to launch a stablecoin is strategically aimed at addressing market needs and ensuring regulatory compliance. The company seeks to offer a stable and trustworthy alternative amidst the instability seen in other stablecoins, leveraging its regulatory compliance across multiple jurisdictions. Ripple's entry into the stablecoin market is not just about competing with established players but also about enhancing its On-Demand Liquidity product, which utilizes XRP for rapid transaction settlements. Despite facing legal challenges with the SEC over the sale of XRP, Ripple remains committed to its vision, planning to launch its stablecoin on both the Ethereum and XRP Ledger blockchains.

Management Quotes

  • Brad Garlinghouse, CEO of Ripple Labs Inc.:

    "Ripple’s stablecoin, designed to maintain a constant value of $1, will start trading later this year... It will be backed by a one-to-one reserve of US dollar deposits, short-term US government bonds and other cash equivalents." "The token will distributed on Ethereum and the XRP blockchain Ripple helped create... adding that no decision has been made on which exchanges it will initially trade on." "Ripple plans to publish monthly attestations on its stablecoin’s reserves... adding that they will be conducted by a third-party accounting firm which Ripple has yet to hire."