Ripple, a cryptocurrency startup, has entered the stablecoin market by launching a digital currency tied to the value of the US dollar, according to CNBC.
The stablecoin will be backed by assets like US dollar deposits and government bonds, ensuring a 1-to-1 value ratio. Ripple plans to release its stablecoin initially in the US but may expand to other regions later.
This move puts Ripple in competition with established stablecoin providers like Tether and Circle.
For context, Tether is currently the leading stablecoin provider, boasting a market capitalization of $106.3 billion according to CoinGecko. While Tether is registered with FinCEN, the US financial crimes watchdog, this registration does not equate to comprehensive regulation. Therefore, Tether is obligated to report suspicious transactions and deals exceeding $10,000.
Meanwhile, Ripple also received a lawsuit from the US Securities and Exchange Commission (SEC) in 2020, alleging that the company unlawfully sold XRP to investors without registering the transactions. While a court recently ruled that XRP itself is not a security, it determined that sales to institutions should be considered unlawful securities sales.
The SEC is seeking $2 billion from Ripple as part of the lawsuit, but Ripple CEO Brad Garlinghouse considers this demand unreasonable, as it only applies to institutional sales.
Ripple will commit to its native cryptocurrency, XRP, despite the challenges of finding widespread adoption among banks and payment firms. While some partnerships, like Santander and MoneyGram, have faced hurdles, Ripple CEO Brad Garlinghouse reaffirms their dedication to XRP as a payment token.
With the introduction of stablecoins seen as complementary to the XRP ecosystem, there are plans to launch a USD-backed stablecoin on the XRP Ledger in response to community demand. Despite obstacles, XRP has shown positive growth in recent months, trading at about 57 cents and experiencing a 13% increase in the last year.
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