By: 8 April 2024

The crypto and blockchain firm says it's the next logical step for the company

Ripple set to launch a USD-backed stablecoin later this year

Ripple, the San Francisco-based crypto and blockchain firm, is set to launch its own US dollar-backed stablecoin this year.

The company has said its decision to enter the $150bn stablecoin market is the next natural step as it continues to bridge the gap between crypto and the traditional finance market. The stablecoin market is forecasted to reach $2.8trn by 2028.

Ripple says its stablecoin will be tethered to the US dollar 1:1, and will monitor deposits, short-term US government treasuries, and other cash equivalents. It’s this pegging of a coin to another asset that differentiates a stablecoin from a traditional crypto currency like Bitcoin. The reserve assets will be audited monthly by a third-party firm.

Forecast to be launched later this year once regulatory approvals have been secured, the offering will make its debut initially on the XRP Ledger (XRPL) and Ethereum blockchains with ERC20 token standards.

Markus Infanger, senior vice-president of RippleX, a business unit within Ripple, said: “We are at the start of a paradigm shift. We are seeing traditional financial institutions not only deploying pilots tokenising real-world assets, but we are having conversations with asset managers, banks and developers, who are interested in how tokenised financial assets on public blockchains can reduce friction and pain points and solve liquidity problems.”

Monica Long, president of Ripple, said: “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.

“The XRP Ledger’s native capabilities, including a decentralised exchange and automated market maker, were built to utilise XRP as the bridge asset. Bringing a trusted stablecoin onto XRPL will drive more adoption and development, contributing to a vibrant ecosystem.”

Whilst this is Ripple’s first major stablecoin, it isn’t their first venture into the market. In July last year the company partnered with The Republic of Palau, an island nation in the Pacific, to launch a limited stablecoin pilot among 200 local merchants and government employees.

There are still some problems with stablecoins. The UN has warned that crypto is fuelling crime in South East Asia, with Tether’s stablecoin being the preferred choice.

Image: fabio on Unsplash

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Robert Welbourn
Robert Welbourn is an experienced financial writer. He has worked for a number of high street banks and trading platforms. He's also a published author and freelance writer and editor.