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Ripple's USD Stablecoin vs. Tether, Circle in $150B Arena

Ripple launches USD-pegged stablecoin to compete in a $150 billion market, promising transparency and regulatory compliance.

By Alex P. Chase

4/4, 09:22 EDT
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Key Takeaway

  • Ripple launches a U.S. dollar stablecoin, entering the $150 billion market against giants like Tether and Circle.
  • The stablecoin is backed 1-to-1 by U.S. dollar deposits, government bonds, and cash equivalents, with monthly attestation reports.
  • Despite competition and an ongoing SEC lawsuit expecting settlement in the "millions," Ripple remains committed to XRP as a payment token.

Ripple Dives into Stablecoin Market

Ripple, a leading name in the crypto payments sector, has announced its foray into the stablecoin arena with a digital currency pegged to the U.S. dollar. This move places Ripple in direct competition with established players like Tether and Circle, as well as newer entrants such as PayPal. Ripple's stablecoin promises a 1-to-1 backing with U.S. dollar deposits, government bonds, and cash equivalents, aiming for transparency through monthly attestation reports. Despite the crowded market, Ripple CEO Brad Garlinghouse is optimistic, citing the evolving landscape and Ripple's regulated status across multiple jurisdictions as key differentiators.

Addressing Market Needs and Regulatory Compliance

The decision to launch a stablecoin was partly influenced by the instability seen in other stablecoins, such as Tether's USDT and Circle's USDC, which have faced depegging incidents. Ripple aims to offer a more stable and trustworthy alternative, leveraging its regulatory compliance in countries like the U.S., Ireland, and Singapore. The company's move is also a strategic step to bolster its On-Demand Liquidity product, which utilizes XRP for rapid transaction settlements. Despite challenges in promoting XRP adoption among banks and financial institutions, Ripple views its stablecoin as a complementary asset that could enhance the XRP ecosystem.

Ripple's Legal Battles and Future Plans

Ripple's announcement comes amidst ongoing legal challenges with the U.S. Securities and Exchange Commission (SEC) over the sale of XRP, which the SEC claims were unregistered securities transactions. A recent court ruling has provided some clarity, but Ripple still faces a potential settlement with the SEC, which CEO Garlinghouse expects to be in the "millions" rather than the billions of dollars. Despite these hurdles, Ripple is pushing forward with its stablecoin initiative, planning to launch on both the Ethereum and XRP Ledger blockchains, with ambitions to expand to other platforms based on market demand and engagement.

Management Quotes

  • Brad Garlinghouse, CEO of Ripple:

    "This market will look different [in future], certainly based on size." "We’ve been using stablecoins in our payment flows for years. This is not a new thing for us... Our view is, having pools of liquidity that are native to the XRP ledger, they complement and help grow the XRP ecosystem. In fact, the number one request we get from the XRP community is to launch a USD-backed stablecoin on the XRP Ledger."