by Jude Ayua and Ndianabasi Tom
Ripple, a leading provider of digital asset infrastructure for financial institutions, is launching its United States dollar-backed stablecoin, RLUSD. Reportedly, Ripple is close to securing approval for it from the New York Department of Financial Services (NYDFS). A project that was first officially announced in April 2024, RLUSD’s announced launch date was for Wednesday, 4 December 2024.
Brad Garlinghouse, Ripple CEO, disclosing the purpose for the launch of its stablecoin in its April announcement, stated: “This is a natural step for Ripple to continue bridging the gap between traditional finance and crypto.” Garlinghouse also highlighted Ripple’s track record and commitment to creating impact in the industry.
“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. This move is also monumental for the XRP Ledger community, driving more use cases, liquidity and opportunities for developers and users,” Garlinghouse said.
When launched, RLUSD will be available on the XRP Ledger (XRPL) and Ethereum (ETH) blockchains. Ripple also plans to expand to additional blockchains and decentralized finance (DeFi) protocols and apps subsequently.
“Issuing our stablecoin on the XRP Ledger and Ethereum will serve as a pivotal entry point to unlock new opportunities for institutional and DeFi use cases across multiple ecosystems,” noted Monica Long, Ripple President. “The XRP Ledger’s native capabilities, including a decentralized exchange and automated market maker, were built to utilize XRP as the bridge asset. Bringing a trusted stablecoin onto XRPL will drive more adoption and development, contributing to a vibrant ecosystem.”
RLUSD’s approval will enable Ripple to launch its stablecoin into New York’s tightly regulated crypto market fully, positioning it as a competitor to prominent stablecoin issuers like Circle, Paxos, and Gemini. The NYDFS’ regulatory framework maintains high standards for transparency, security, and consumer protection, which Ripple must meet. Ripple hinted it would partner with platforms like Moonpay and Bitstamp for RLUSD’s launch. Keith Grossman of Moonpay commended Ripple’s move, describing it as a “win-win” for the global stablecoin market.
Read also: What is fueling XRP’s 100% price increase in the past 14 days?
RLUSD’s benefits
In its April announcement, Ripple highlighted the key benefits of its stablecoin to include:
- Enterprise-Grade: Focusing on blockchain-based enterprise solutions tailored for financial institutions and businesses, Ripple will use both XRP and RLUSD in its payment solution to enhance customer experience as the first large-scale enterprise use case. This development will enable Ripple to address the growing demand in emerging markets for stablecoin-based payouts.
- Compliance-First Mindset: Ripple prioritizes regulatory compliance, having an extensive global license portfolio, including a New York BitLicense, 40 US money transmitter licenses, Major Payment Institution License from Singapore, and Virtual Asset Service Provider registration in Ireland. Ripple’s acquisition of NY Trust Charter ‘s holder, Standard Custody earlier this year, further strengthens its regulatory standing to better serve enterprise clients.
- Liquidity on the Decentralized Exchange (DEX): While XRP is XRPL’s native currency, the Ledger supports trading and global settlement of various assets on its decentralized exchange (DEX) at low costs. Adding RLUSD to the Ledger enhances the DEX’s ecosystem, offering significant benefits to users, developers, and applications.
- Transparent Stablecoin Reserve: Backed by a 1:1 “cash and cash equivalents,” RLUSD is built for transparency and reliability. Furthermore, to reinforce trust, Ripple will release monthly asset attestations once the stablecoin is launched.
- Multichain Compatibility: RLUSD will launch on the XRP Ledger and Ethereum, using XRPL’s traditional features and ERC20 standards which enables developers on both platforms to integrate the stablecoin for secure and reliable transactions. It will extend its issuance to additional blockchains to enhance cross-chain interoperability for users.
XRP’s legal battle and market performance
Ripple has been facing an intense regulatory battle since 2020. The Securities and Exchange Commission (SEC) sued Ripple over allegations that XRP, its native cryptocurrency, is an unregistered security. The lawsuit caused a drastic fall in XRP price, plummeting by over 50 percent and removing $16 billion from its market cap. It struggled to recover, with its value staying under $1 until November 2024 after Donald Trump’s re-election victory.
One of Trump’s campaign promises—to make the United States the “crypto capital of the planet,” reignited optimism in the crypto industry impacting XRP market performance. XRP witnessed a price spiral climbing back into the top five cryptocurrencies by market cap. Valued at over a $100 billion market capitalization on 1 December 2024, XRP’s price rose by 23.79 percent to $2.33 in 24 hours, and its trading volume moved over 160.63 percent to $30.81b. The price surge brought 7-day gains to 30 percent, outperforming bitcoin (BTC) and other major cryptocurrencies, while 30-day gains stood at nearly 300 percent, data from CoinGecko show.
Read also: XRP claims 3rd largest cryptocurrency spot; eyes new all-time high price.
RLUSD’s prospects and implications for XRP token
Ripple’s legal battle with SEC brought fears about XRP token’s survival, with likelihood that RLUSD will become Ripple’s alternative to the token. However, with Trump’s win, Chris Giancarlo (former Chairman of the CFTC) predicted that the SEC might drop the suit.
Whatever may be the outcome of the lawsuit, Ripple’s stablecoin approval will significantly impact the already staggering XRP. Stablecoins by nature are tied to assets with stable value, for example, $USD, making them preferred for payments and remittances. Ripple depends on XRP to facilitate cross-border payment. While the anticipated approval indicates a positive development for Ripple, when approved, the stablecoin may lead to a declining usage and adoption of XRP token for cross-border transactions, impacting XRP’s price and valuation negatively.
Read also: XRP Coin soars as Ripple secures major victory in U.S SEC lawsuit. What investors should know.
Market Insights
RLUSD expected launch is focal in the stablecoin market, with implications for both market dynamics and regulatory frameworks. RLUSD will enable Ripple to diversify away from XRP, which is still under regulatory scrutiny. Its launching on both the XRP Ledger and Ethereum supplements Ripple’s multi-chain capabilities, enabling it to boost liquidity within decentralized ecosystems and its appeal across blockchain platforms.
Ripple’s stablecoin expected approval is a positive development for the crypto industry as it signifies increasing institutional adoption of crypto assets, especially stablecoins. It is a step toward reshaping the stablecoin market with a regulated, fully backed digital dollar. It will also increase capital inflow into the crypto market upon approval of RLUSD, which will contribute to a higher crypto market valuation.
Regulatory approval from the NYDFS is indicative of Ripple’s compliance-first approach, setting a precedent for future stablecoin issuers. Ripple’s transparency strategy of monthly reports corresponds with anticipated Federal stablecoin legislation under the incoming Trump administration.
Read Also: Ripple and XRP Explained
Jude Ayua is a policy analyst at CAB. A lawyer, Jude is an associate at Infusion Lawyers where he is a member of the Blockchain & Virtual Assets Group. He is also a member of the Policy & Regulations Committee of the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN). Jude reports and writes on crypto policy and regulations. jude@infusionlawyers.com
Ndianabasi Tom A Petroleum Engineering degree holder, Ndianabasi’s interest since 2018 has been studying the ever-growing field of blockchain and cryptocurrency, keenly evaluating the innovation, exploration, and expansion of this field locally and globally. The founder of Nitadel a media platform, Ndianabasi has been a Writer at Crypto Asset Buyer (CAB) since 2021. When he is not drilling resources in the blockchain and cryptocurrency field, Ndianabasi is singing, reading, watching crime movies, or playing football.
