Ripple Enters Competitive Stablecoin Market with US Dollar Token Launch

Blockchain Giant to Introduce Dollar-Pegged Stablecoin Amid Growing Competition

Apr 4, 2024 - 10:04
Apr 4, 2024 - 10:05
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Ripple Enters Competitive Stablecoin Market with US Dollar Token Launch
Ripple Enters Competitive Stablecoin Market with US Dollar Token Launch

Ripple Labs Inc., a leading blockchain developer, is gearing up to launch its own dollar-denominated stablecoin, adding to the crowded landscape of digital assets. The stablecoin, designed to maintain a constant value of $1, is set to debut later this year, according to CEO Brad Garlinghouse.

Backed by a one-to-one reserve of US dollar deposits, short-term US government bonds, and other cash equivalents, Ripple's stablecoin aims to offer stability amidst the volatility of the crypto market. It will be distributed on both the Ethereum and XRP blockchains, although the initial trading exchanges have yet to be determined.

With stablecoins pegged to the US dollar accounting for approximately 90% of the $153 billion market, Ripple faces stiff competition from established players like Tether Holdings Ltd. and Circle Internet Financial Ltd. Nevertheless, the rise in bond yields has made launching stablecoins an attractive proposition, as it promises higher earnings from the assets held to back the tokens.

Ripple plans to uphold transparency by publishing monthly attestations on the reserves backing its stablecoin. These attestations will be conducted by a third-party accounting firm, yet to be appointed by Ripple. They will include details on the banking partners responsible for custodying the assets, ensuring accountability and trust in the stablecoin's ecosystem.

While regulatory frameworks for stablecoins are set to tighten, particularly in Europe from July onwards, Ripple remains optimistic about the regulatory landscape in the United States. Garlinghouse anticipates the approval of a stablecoin bill before the upcoming presidential election, signaling a potential shift in the regulatory environment for digital assets.

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