Ripple launches RLUSD: What it means for the stablecoin market

Ripple will launch its enterprise-grade stablecoin, RLUSD, on December 17. This new stablecoin is pegged 1:1 to the U.S. dollar and will be natively issued on both the Ethereum and XRP Ledger blockchains. Backed by cash reserves, RLUSD aims to provide real-world utility and transparency while positioning Ripple against major competitors like Tether and Circle. The company emphasizes a compliance-first approach, committing to monthly audits by independent firms to confirm its reserve holdings.

Ripple to launch RLUSD stablecoin on December 17

At launch, RLUSD will be available on five notable crypto platforms: Uphold, Bitso, MoonPay, Archax, and CoinMENA. Ripple intends to broaden RLUSD’s presence on additional exchanges in the following weeks, including Bullish, Bitstamp, Mercado Bitcoin, Independent Reserve, and Zero Hash. The stablecoin has undergone testing on the XRP Ledger and Ethereum since August and recently obtained its final regulatory approval from the New York Department of Financial Services (NYDFS).

Ripple CEO Brad Garlinghouse highlighted the importance of obtaining the NYDFS approval, viewing it as part of an effort to build global trust. He stated, “Early on, Ripple made a deliberate choice to launch our stablecoin under the NYDFS limited purpose trust company charter, widely regarded as the premier regulatory standard worldwide. As the U.S. moves toward clearer regulations, we expect to see greater adoption of stablecoins like RLUSD, which offer real utility and are backed by years of trust and expertise in the industry.”

In the current landscape, regulatory compliance for stablecoins is crucial, particularly amid scrutiny regarding reserve transparency. Tether, the largest stablecoin issuer, has faced ongoing criticism for its reserve disclosures.

 

Integrating RLUSD into Ripple’s payment network

Ripple plans to incorporate RLUSD into its Ripple Payments network by early 2025. The expectation is that RLUSD will enable efficient, low-cost cross-border transactions, especially within the XRP Ledger. This strategy could create new business opportunities for Ripple, which has struggled to retain its market position in recent years. Ripple focuses on combining regulatory compliance and established blockchain technology to redefine stablecoins’ role in global finance.

The launch of RLUSD signifies Ripple’s efforts to reclaim its standing in the U.S. market after facing significant regulatory challenges. Following the SEC’s 2020 lawsuit that halted XRP trading on multiple domestic exchanges, Ripple has received a partial legal victory, allowing XRP to be re-listed on several U.S. platforms. NYDFS’s approval for RLUSD adds a vital layer of legitimacy to Ripple’s operations, especially as the company increases its investments in pro-crypto lobbying and political campaigns, aiming to rebuild its reputation.

Market context for RLUSD’s launch

The launch occurs amid rising anticipation for more favorable U.S. regulations on cryptocurrencies, particularly with Donald Trump’s upcoming presidency. The market for dollar-backed stablecoins has expanded significantly, with a 50% growth over the year. Tether dominates roughly 70% of that market, while Circle’s USDC constitutes about 20%. Ripple’s senior vice president of stablecoins, Jack McDonald, acknowledges market feedback suggesting a demand for alternatives to existing stablecoin incumbents, according to CNBC.

Ripple, a prominent business-to-business payments firm, primarily operates outside the U.S., serving banks and financial institutions’ cross-border payment needs. Traditionally, stablecoins have found use in trading; however, Ripple aims to incorporate RLUSD to complement its established operations. McDonald articulated the synergy, stating, “There’s a place in payments specifically for both XRP and for stablecoins.”

Featured image credit: Ripple