Ripple has achieved a significant milestone with its U.S. dollar-backed stablecoin, RLUSD, receiving final regulatory approval from the New York Department of Financial Services (NYDFS). This landmark decision marks a pivotal moment for Ripple, as announced by CEO Brad Garlinghouse on social media platform X. The news triggered a 10% surge in XRP, Ripple’s native token, signaling a new era for the company as it moves forward into the stablecoin market.
RLUSD: Ripple’s Big Bet on Stablecoins
Currently undergoing beta testing on both the Ethereum network and XRP Ledger (XRPL), RLUSD boasts a circulating supply of $52 million. Anchored to short-term U.S. government bonds, this stablecoin aims to penetrate the burgeoning stablecoin market, presently led by Tether (USDT) and Circle (USDC). Ripple’s strategic entry into this market aligns with its broader objective to lead in institutional payments and the tokenization of real-world assets.
Stablecoins’ Current Market Position
Valued at nearly $200 billion, the stablecoin market is poised for exponential growth in the coming years. Ripple intends to utilize RLUSD to enhance its role in global payments, simultaneously serving as a conduit for traditional financial assets to transition onto blockchain networks. The tokenization process, which involves converting physical assets into digital tokens for enhanced transaction efficiency, remains a focal point for Ripple. With RLUSD, Ripple is set to become a significant contender in this evolving trend.
Will RLUSD Propel XRP to New Heights?
Crypto expert Vincent Van Code provides a straightforward analysis of the excitement surrounding RLUSD and XRP. Although XRP’s recent rise from $1.90 to $2.35 is noteworthy, it is primarily driven by speculation rather than substantial real-world application. The real transformation is anticipated when Ripple implements automated market makers (AMMs) and liquidity pools (LPs), offering annual returns of up to 5% on-chain without counterparty risk. This approach could attract substantial investment to the XRPL, with exchanges facilitating RLUSD staking to lock up more XRP, thereby increasing demand.
Additionally, users might convert their USDT holdings to RLUSD, transferring these funds to self-custody wallets. From there, RLUSD can be used to purchase XRP or invest in LP tokens for enhanced returns, creating a feedback loop that further bolsters XRP demand. Thus, the current price surge is just the beginning, setting the stage for sustained growth. Van Code forecasts that RLUSD could potentially double XRP demand and significantly impact the market by February 2025.
However, the current market climate is challenging, with the crypto sector experiencing a downturn, evidenced by a 12% drop in XRP to $2.07. Despite the positive news regarding Ripple’s stablecoin approval, the volatility within the crypto market persists, reflecting widespread price declines.
When Will RLUSD Launch?
The RLUSD stablecoin from Ripple is anticipated to launch by the end of 2024, following its recent regulatory approval from the New York Department of Financial Services (NYDFS).
Is the Federal Reserve Going to Use XRP?
While the Federal Reserve has not officially adopted XRP, Ripple’s participation in the FedNow real-time payment system has sparked speculation regarding its potential future role.
