Ripple Launches USD Stablecoin to Compete with USDT and USDC

Ripple, the issuer of XRP, has announced its plans to launch a stablecoin backed by the U.S. dollar. The company hopes to compete with Circle and Tether in the stablecoin market over the next five years. David Schwartz, Ripple’s chief technology officer, revealed these plans and explained that the stablecoin will be initially issued on the XRP Ledger and Ethereum blockchains. While the name and ticker for the stablecoin have not yet been decided, Schwartz referred to it as the “Ripple stablecoin” for now.

Ripple has been considering the idea of launching a stablecoin for more than a year. According to Schwartz, the stablecoin market is not as diverse and robust as it could be. He estimates the current value of the stablecoin market to be around $150 billion and believes there is room for another major player. He predicts that the market will grow to over $2 trillion by 2028 and believes that it won’t be a winner-takes-all market, especially in the decentralized finance (DeFi) sector.

The Ripple stablecoin will have a 1:1 ratio with the U.S. dollar and will be backed by U.S. dollar deposits, short-term U.S. government treasuries, and other cash equivalents. Ripple plans to focus on compliance, taking inspiration from Circle’s approach with its USDC stablecoin. Schwartz stated that Ripple aims to compete directly against USDC and is looking to gain market share without taking unnecessary risks with other people’s money.

To ensure transparency and credibility, Ripple will have the reserve assets audited by a third-party accounting firm and will publish monthly attestations. Schwartz mentioned the early days of Tether’s USDT stablecoin, where concerns were raised about the issuer potentially stealing funds and the credibility of its reserve attestations. He believes that launching a new stablecoin that attracts significant amounts of money will naturally raise these types of concerns.

Ripple is confident in its credibility, track record, and strong balance sheet, which it believes will enable it to establish itself in the stablecoin market. Schwartz stated that even if Ripple ends up as the third-largest stablecoin after two years, but the market has grown tenfold, it would still be considered a success.

also asked why Ripple is interested in launching a stablecoin while promoting XRP as the token for its real-time gross settlement system, currency exchange, and remittance network targeting financial institutions. Schwartz explained that RippleNet serves non-bank payment companies that use XRP for transparent payments. There are some markets where these firms cannot use XRP or need additional liquidity. By offering a stablecoin, Ripple can provide customers with more options and enhance their experience.

The introduction of the Ripple stablecoin will also complement the ecosystem’s recently launched automated market maker. Schwartz believes that the stablecoin will provide liquidity and exploit volatility and arbitrage opportunities between different assets.