Ripple is entering the stablecoin market with a U.S. dollar-backed digital currency, stepping into a $150 billion arena currently dominated by Tether and Circle.
The new stablecoin from Ripple will maintain a 1-to-1 peg with the U.S. dollar, backed by assets such as U.S. dollar deposits, government bonds, and cash equivalents held in reserve by the company. Ripple plans to provide transparent monthly reports on its reserves, although the auditing firm has not been disclosed.
Initially launching in the U.S., Ripple hasn’t ruled out expanding to other regions like Europe and Asia. This move positions Ripple against major players like Tether and Circle, as well as PayPal, which recently introduced its own stablecoin backed by U.S. dollars.
Ripple’s CEO, Brad Garlinghouse, expressed confidence in the competition, noting that the stablecoin market is poised for change in the future due to its growth potential.
“This market will look different [in future], certainly based on size.”
Garlinghouse stated that Ripple decided to launch a stablecoin in response to instability seen in rival firms like Tether and Circle, whose stablecoins temporarily lost their peg to the U.S. dollar in recent years. There have been concerns about the reserves backing Tether’s stablecoin, leading to doubts about its stability in times of market stress.
Ripple aims to provide a regulated alternative, highlighting its licences in various countries.
Despite its focus on stablecoins, Ripple remains committed to its XRP token, with stablecoins as complementary rather than competing products within its ecosystem.
Garlinghouse insisted that Ripple hasn’t given up on XRP as a payment token and that stablecoins would serve as more of a complementary product for the XRP ecosystem.
“We’ve been using stablecoins in our payment flows for years,” he said. “This is not a new thing for us.”
XRP is up around 13% in the last 12 months, according to CoinGecko data, and is currently trading at about 57 cents.
