![Ripple Unveils Plans for New Stablecoin Pegged to U.S. Dollar](https://coincult.com/wp-content/uploads/2024/04/images-2.jpeg)
Ripple, the enterprise blockchain company behind the XRP Ledger, has announced its intention to launch a new stablecoin pegged to the value of the U.S. dollar. According to Ripple’s statement, the stablecoin market has experienced significant growth, currently exceeding $150 billion, and is forecasted to surpass $2.8 trillion by 2028.
The company stated that the forthcoming token, scheduled for release later this year, will be “100% backed by U.S. dollar deposits, short-term U.S. government Treasuries and other cash equivalents.” This move aims to provide trust, stability, and utility in the stablecoin market, which Ripple believes has clear demand.
Furthermore, Ripple’s Chief Technology Officer, David Schwartz, explained that the decision to enter the stablecoin arena was partly opportunistic, given the growing market. “Part of it is just opportunistic. It’s a growing market,” Schwartz said. “You could be a bank that pays no interest. That seems like a pretty good business opportunity.”
Ripple will deploy the stablecoin on its XRP Ledger, targeting institutional clients. Additionally, it will deploy the token on the Ethereum blockchain, basing it on Ethereum’s ERC-20 standard to enable usage within the Ethereum ecosystem.
Stablecoins have proven popular among crypto traders due to their stability compared to more volatile cryptocurrencies like Bitcoin and Ethereum. Schwartz emphasized that Ripple’s differentiator will be its rock-solid backing. “What we think is going to be our differentiator is going to be the fact that the assets are going to be in dollars, Treasuries—rock solid,” he said.
Ripple Prioritizes Transparency in Stablecoin Launch Amid Market Expansion
Transparency will be a key focus for Ripple as it rolls out its new stablecoin. Schwartz stated, “We’re going to have monthly public audits, hopefully by a top-tier accounting firm and will disclose more later. We’re aiming for complete transparency. You know, we’ll do whatever we need to do to address those issues.”
Schwartz pointed out that the potential growth of the stablecoin market disincentivizes providers from acting dishonestly. “In the early days of Tether, people were expecting it to blow up any day, and they felt like it was sketchy,” he said. “But now, if you’re Tether, running off with people’s money wouldn’t make sense. Even if that were your plan, you’d wait to do it because the market is only growing.”
Furthermore, Schwartz states that Ripple primarily targets enterprise customers and banking institutions, organizations that must justify their decisions to stockholders, regulators, and others. To satisfy this market segment’s needs, Ripple says it is using U.S. banks to hold its reserves and adopting a “compliance-first mindset.”
While Circle’s USDC currently leads the compliance-oriented stablecoin market, Schwartz believes there is room for multiple players. “If we were a solid number three and the market grows 12x, that’s not a failure scenario,” he said. “We would like to do better than that, but that’s not a failure case; that’s still pretty good.”
Moreover, Ripple’s announcement comes as the company continues to battle an enforcement case brought by the U.S. Securities and Exchange Commission (SEC).
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