Ripple has announced plans to introduce a stablecoin pegged to the US dollar this year, as the stablecoin market is currently valued at around $150 billion and projected to exceed $2.8 trillion by 2028. The stablecoin will be fully collateralized by US dollar deposits, short-term US government treasuries, and other cash equivalents, with reserve assets audited by a third-party accounting firm. This move positions Ripple as a competitor to established stablecoin leaders like Tether and Circle, as well as PayPal, which launched its own USD-backed stablecoin, PayPal USD, on Ethereum last year.
Stablecoins are a distinct class of cryptocurrency designed to have minimal price fluctuations by pegging their value to external assets such as traditional fiat currencies or financial instruments. This stability makes them a less volatile investment option compared to cryptocurrencies like Bitcoin and Ethereum, appealing to risk-averse investors. Ripple CEO Brad Garlinghouse stated that institutions entering the stablecoin market are finding success by partnering with compliant, crypto-native players like Ripple, which has a track record of success and resilience through market cycles.
Ripple’s stablecoin will initially launch on the XRP Ledger (XRPL) and Ethereum blockchains, with plans to expand to additional blockchains, DeFi protocols, and applications in the future. The decision to launch on both XRPL and Ethereum enables cross-chain interoperability, essential for seamless interaction between different blockchain networks. Ripple intends to integrate both XRP and the stablecoin into its payment solutions to enhance customer experience, especially for customers in emerging markets who have expressed interest in using stablecoin payouts.
Tether co-founder William Quigley expressed skepticism about PayPal’s ability to dominate the stablecoin market, particularly beyond the US, as PayPal’s stablecoin currently ranks 12th globally with a market capitalization of $190 million. Despite this competition, the stablecoin market continues to grow, driven by demand for trust, stability, and utility. Ripple’s entrance into the stablecoin market aims to capitalize on this demand by offering a stablecoin pegged 1:1 to the USD, providing a stable investment option for investors looking for less volatility.
Ripple’s stablecoin launch on XRPL and Ethereum is expected to bring more use cases, liquidity, and opportunities for developers and users in the cryptocurrency space. While the initial launch is targeted at the US market, Ripple has not ruled out the possibility of introducing regional variations for other markets such as Europe and Asia. This expansion and the integration of XRP and the stablecoin into payment solutions represent a significant step towards establishing a large-scale enterprise use case for the asset, with the potential to drive adoption in emerging markets where stablecoin payouts are in demand. Ripple’s focus on compliance, crypto-native partnerships, and cross-chain interoperability sets it apart as a key player in the evolving stablecoin market.
