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Ripple Launches USD-Backed Stablecoin: ‘Natural Step’ Amid SEC Battle 

Published April 4, 2024 6:08 PM
Shraddha Sharma
Published April 4, 2024 6:08 PM

Key Takeaways

  • Ripple announces the launch of a USD-backed stablecoin.
  • The stablecoin uses the XRP Ledger and Ethereum for initial deployment.
  • Ripple promises transparency and compliance on the sidelines of the legal battle with the SEC.

Ripple has unveiled plans to launch a stablecoin pegged to the US dollar in 2024. The announcement comes amid Ripple’s ongoing legal challenges with the SEC. The stablecoin aims to bridge traditional finance and decentralized finance (DeFi) but why is it a ‘natural step.’

Launch of Ripple’s Stablecoin

Ripple’s announcement  of its stablecoin launch notes that the market is currently valued at around $150b. With estimates that the market will surpass $2.8T by 2028, looks like Ripple wants a piece of the pie.

Underscoring a growing demand for stable and reliable digital currencies, Ripple’s entry is timed to capitalize on this trend. The Ripple stablecoin is directly pegged to the USD and will be supported on both the XRP Ledger (XRPL) and Ethereum blockchain.

The stablecoin promises to be 100% backed by tangible assets like US dollar deposits, government securities, and cash equivalents, ensuring its stability and reliability.

Ripple promised transparency, pledging monthly audits by third parties to verify its backing. Brad Garlinghouse, Ripple CEO, noted that the introduction of the stablecoin is seen as an entry point for XRP Ledger to generate new use cases, enhance liquidity, and open opportunities for developers and users.

Bridging Traditional Finance and Crypto

Garlinghouse emphasized that launching a stablecoin represents a “natural step” in the company’s mission to bridge the gap between traditional finance and crypto.

He noted, “Institutions entering this space are finding success by partnering with compliant, crypto-native players and Ripple’s track record and resiliency speaks for itself, as we launch new products and acquire companies through multiple market cycles.”

Ripple says it is uniquely positioned to introduce products that meet the needs of institutions while also catering to the DeFi use cases. The platform’s plans to extend its reach to other blockchains and DeFi protocols come amid its ongoing legal battle with the SEC.

Going back to the landmark July 2023 ruling by US District Judge Analisa Torres. The ruling was seen as a partial victory for Ripple as the court said that the sale of Ripple’s XRP tokens through exchanges and automated processes would not come under the securities laws. However, it did find that sales directed at institutional investors violated federal securities laws.

Garlinghouse’s focus also reflects Ripple’s strategy for institutional expansion. By designing the stablecoin for deployment on the institution-friendly XRP Ledger, Ripple aims to further legitimize and enhance the role of cryptocurrencies in formal financial systems.

Ripple Continues Expansion

As Ripple steps into the stablecoin market, it is faced with the SEC’s legal arsenal. However, Ripple has moved focus on compliance, transparency, and institutional launches with its stablecoin.

The anticipated launch of the stablecoin is slated for 2024. It coincides with the potential conclusion of the ongoing lawsuit.

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