Ripple, the blockchain-based payment solutions provider, is poised to enter the stablecoin market with Ripple USD (RLUSD), also affectionally termed “Real USD” by CEO Brad Garlinghouse. The company plans to launch this new digital currency on the Ethereum network and the XRP Ledger (XRPL) within the year, expanding its technological and financial reach in digital asset management.
Ripple Acquisitions and Licensing
Ripple recently finalized its acquisition of Standard Custody, marking a significant step toward launching its stablecoin. This move follows Ripple’s $250 million purchase of Metacon in May 2023, a leader in institutional digital asset custody. These acquisitions enhance Ripple’s capabilities in issuing stablecoins and tokenizing real-world assets. Furthermore, Ripple has successfully expanded its regulatory framework by adding a New York-regulated trust company to its already extensive license portfolio, including approvals from Singapore and Ireland.
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Previously CEO at Standard Custody, Jack McDonald has been appointed Senior Vice President of Ripple’s stablecoin segment. Garlinghouse expressed confidence in McDonald’s expertise, stating, “Jack’s deep experience across financial and digital asset sectors uniquely positions him to lead our stablecoin initiatives.” This strategic leadership is expected to drive the successful integration and launch of RLUSD forward.
In its ongoing effort to enhance interoperability and user experience, Ripple has adopted Axelar as its bridge solution to connect the XRP Ledger with Ethereum-compatible sidechains. This technology supports the seamless swapping of XRP for wrapped XRP (eXRP), which will facilitate transactions and pay gas fees on the XRPL EVM Sidechain. “Axelar is a battle-tested, production-ready bridge that brings XRP as a native currency to the XRPL EVM Sidechain,” Ripple stated, highlighting the bridge’s proven efficacy and wide adoption in the blockchain community.
Integrating Axelar over the previously considered XLS-38 cross-chain bridge underscores Ripple’s commitment to user-friendliness and robust technology solutions. The company also aims to foster broader adoption by leveraging Axelar’s successful partnerships with notable projects, including Uniswap, and collaborations with industry giants like Microsoft.
Regulatory Challenges and Market Competition
Despite Ripple’s ambitious plans for RLUSD, the project faces regulatory scrutiny from the U.S. Securities and Exchange Commission (SEC). The SEC has hinted that RLUSD might be considered an unregistered security, an allegation that follows an ongoing lawsuit concerning Ripple’s XRP sales. Although a July 2023 federal court verdict declared that XRP is not a security, the SEC has appealed this ruling and is seeking a $2 billion settlement from Ripple.
The entry of RLUSD into the stablecoin market sets Ripple against established players like Tether (USDT) and Circle (USDC). With its technological advancements and strategic acquisitions, Ripple aims to carve out a significant niche in this competitive space. However, the outcome of the SEC’s final ruling and Ripple’s ability to navigate these legal challenges will be crucial in determining the stablecoin’s success and adoption.
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