Ripple Labs has announced plans to join the increasingly competitive stablecoin market by launching its own native US-pegged digital currency.
Backed 1:1 with the US dollar, Ripple has revealed that the stablecoin will first be rolled out in the US later this year but has not ruled out expanding the digital currency to other countries.
The crypto exchange aims for the token to allow asset managers and other financial institutions trade securities and bridge the gap between traditional and decentralised financial markets, a view which has been held for many stablecoins in recent years.
Ripple joins market leaders Tether and Circle who issue the two largest stablecoins, USDT and USDC respectively, in a bid to capitalise on the recent bull market crypto is currently experiencing.
Along with PayPal launching its PYUSD stablecoin last year, Markus Infanger, Senior Vice-President at Ripple, believes that stablecoins are playing a critical role in the surge in the market, with Bitcoin recently hitting a record-high price of over $70,000.
He said: “Our assessment of the market shows very clearly stablecoins are playing an important role. They’re here to stay and they’ve been growing significantly, and we firmly believe the growth will continue to be very strong.”
With the stablecoin market valued at over $150bn, Infanger believes that there is still work to be done to solve the existing friction in the relationship between traditional and tokenised assets.
It remains to be seen whether Ripple’s stablecoin will be used as a form of payment, much like PYUSD, but Infanger asserts that the token will ‘remain very much compliant’ relating back to stablecoin’s fiat-backed nature.
The move from Ripple comes during a time of regulatory uncertainty for the exchange. Despite securing a court battle victory last July, after a New York judge deemed its XRP cryptocurrency not a security, but the Securities and Exchange Commission (SEC) has had its appeal approved.
Since March, the SEC has been lobbying the same New York judge to impose a $2bn fine against Ripple. The regulator believes that the firm has been committing “abuses” to securities laws.
Stuart Alderoty, Chief Legal Officer of Ripple, has since stated that the SEC’s fine was asking for too much and the company will be filing its response no later than the 22 April 2024 deadline.
