RLUSD Targets the Helm of $6.87T Stablecoin Market

• Ripple has published a blog post to introduce several key aspects of fiat-backed stablecoins such as their valuation and regulatory progress amid the recently launched RLUSD. 

• According to the post, fiat-backed stablecoins made $6.87T worth of transactions in 2022, dwarfing the likes of MasterCard and PayPal. 

Ripple (XRP) has, in its latest report, taken a comprehensive look at stablecoins, presenting their main definitions, how they work, their valuation, and the core purpose of its recently released project, Ripple USD (RLUSD). 

Stablecoins combine the speed, security, and efficiency of blockchain with the trust of USD. As cash use declines, more are turning to stablecoins for fast, secure, low-cost payments. 💸 Get the latest on emerging trends in stablecoin payments: https://t.co/stVjXAjOKQ— Ripple (@Ripple) September 17, 2024

Firstly, Ripple defined stablecoin as a type of digital currency meant to make crypto payments more practical. According to them, most stablecoins are designed to be pegged by fiats such as the Euro and Dollar, making them the gateway into blockchain payment among crypto users with volatility concerns. 

Putting their adoption into perspective, Ripple pointed out that fiat-backed stablecoins transacted $6.87T in 2022, overshadowing the figures of both MasterCard and PayPal. Currently, the market cap of fiat-backed stablecoins is more than $100 trillion. Based on data, the scene has been dominated by Tether’s USDT and Circle’s USDC; however, they are facing stiff competition from newly introduced projects like Ripple’s RLUSD and PayPal’s PYUSD. 

More About the RLUSD Stablecoin

In the blog post, Ripple highlighted that its stablecoin, RLUSD, was designed to ensure the maintenance of a constant value of one US dollar. According to the post, RLUSD is 100% backed by a segregated reserve of cash and cash equivalents. Just like any other fiat-based stablecoin, it is redeemable 1:1 for US dollars. For now, it is issued on the XRP Ledger and Ethereum blockchains. 

(It) enables instant payouts and easy fiat-stablecoin on/off ramps. For exchanges, remittance, and money transfer providers, or payment service providers (PSPs) that want to hold, buy, and trade USD on-chain, RLUSD provides fast settlement, multi-chain issuance, and programmable finance—opening up a whole new world of use cases and revenue streams.

Based on the recent regulatory challenges, RLUSD was reportedly built with a compliance mindset to ensure that developers, payment providers, and exchanges leverage the stability and transparency it comes with. According to Ripple, its stablecoin initiative underscores its effort to accelerate the digital asset economy. 

Ripple CTO’s Remark and General Regulatory Progress

Recently, Ripple’s Chief Technology Officer (CTO) David Schwartz explained that the growing demand for stablecoin payouts influenced the move. To Ripple, this could be another flagship project for a cross-border solution meant to provide the best experience for customers. 

This is a pretty significant strategic move for us. For a while, we’ve used a combination of assets in things like on-demand liquidity, now Ripple Payments: XRP, fiat, and stablecoins. We’ve built those into cross-border solutions to provide the best experience for our customers. And in emerging markets, we’ve seen a demand for stablecoin payouts instead of local fiat currency.

As we highlighted in our recent publication, Schwartz has disclosed that the stablecoin would first be directly supplied to institutional investors, following the footsteps of USDT and USDC. 

Commenting on the current development of stablecoin regulation, Ripple disclosed that this has begun to take shape. According to the post, stablecoin regulation is progressing more rapidly across the continents, including North America, Europe, and Asia. With the US, the recent bipartisan support for the ‘Clarity of Payments Stablecoin Act’ was cited as an important step toward the implementation of the required regulatory framework. 

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