Ripple Labs is on the verge of launching its much-anticipated US-dollar pegged stablecoin. Brad Garlinghouse, the company’s CEO, confirmed the imminent release of the token, dubbed Ripple USD (RLUSD), at the Korea Blockchain Week event today. According to Garlinghouse, the stablecoin is set to debut in just a matter of weeks, significantly sooner than initially expected.
Garlinghouse shared the motivation behind the move, citing the depegging of USD Coin (USDC), the second-largest stablecoin by market capitalisation, in March 2023. This incident exposed vulnerabilities in existing stablecoins, sparking interest in alternatives. “We felt like there was an opportunity for a credible player already working with lots of financial institutions to lean into that market,” Garlinghouse said, highlighting Ripple’s longstanding relationships with banks and financial institutions as a unique advantage.
Ripple first announced its intentions to introduce a stablecoin in April, stating that RLUSD would be fully backed by US dollar reserves. The backing will consist of US dollar deposits, short-term US government Treasuries, and other highly liquid assets. This structure is designed to enhance confidence in the stablecoin’s reliability, addressing concerns that emerged following the USDC’s depegging.
In August, Ripple began testing RLUSD with a selection of enterprise partners, ensuring the stablecoin would meet the rigorous demands of institutional users. The stablecoin will initially be available on Ripple’s XRP Ledger, an institution-focused blockchain, as well as Ethereum, utilising the widely-used ERC-20 token standard. By deploying on both networks, Ripple aims to tap into the broad user base of Ethereum while leveraging the XRP Ledger’s efficiency.
The introduction of RLUSD also coincides with significant upgrades to the XRP Ledger, which now supports Ethereum-compatible smart contracts. These smart contracts will enable a range of decentralised financial services on the XRP Ledger, including the ability to create on-chain exchanges and issue new tokens. These enhancements further position Ripple to compete with Ethereum, the leading platform for decentralised finance (DeFi) applications.
Ripple’s move into the stablecoin market comes at a time when stablecoins are under heightened scrutiny from regulators, particularly in the United States. Despite this, Ripple’s established compliance with regulatory frameworks and its existing relationships with financial institutions could provide a smoother path for adoption compared to other stablecoin projects.
With the launch of RLUSD on the horizon, Ripple is set to further solidify its position as a leading blockchain firm, offering reliable, institution-focused financial services. The company’s entry into the stablecoin market is expected to bring heightened competition and innovation to the sector, especially following recent disruptions in the market. The success of RLUSD could be a major milestone in the evolving stablecoin landscape, providing a more resilient and reliable alternative for users and institutions alike.
