XRP Ledger Was First To Support Stablecoins: Former Ripple Director

Hamilton’s statements come as dollar-pegged stablecoins have recently faced heightened uncertainty.

Former Ripple Director Matt Hamilton has asserted that the XRP Ledger (XRPL) was the first blockchain with stablecoin support.

Hamilton disclosed this in a Twitter thread on Saturday. It came in response to complaints from Joe Weisenthal, co-host of the Odd Lots podcast. Weisenthal pointed out that depositors do not see themselves as lenders to the bank, raising concerns over how they are treated as creditors when these banks fail.

Asserting that the Odd Lots podcast co-host raised an interesting point that could be explained using the XRPL, the former Ripple staff let slip that the XRPL was the first blockchain to support stablecoins, then referred to as IOUs (I owe you). At the most basic level, IOUs are documents that acknowledge debts.

1/3 Actually, this is quite an interesting point in relation to the XRP Ledger.

The XRP Ledger was the first blockchain to support what we now refer to as “stablecoins”. On the XRP Ledger they were referred to as IOUs. https://t.co/Y6FAChsXl7

— Matt Hamilton (@HammerToe) March 11, 2023

As explained by Hamilton, using Circle’s USD Coin as an example (USDC), users who purchase stablecoins lend fiat to stablecoin issuers in exchange for tokenized representations on the blockchain. It works because users trust that stablecoin issuers would return their fiat on demand.

However, the former Ripple director points out that the market perception of stablecoins changed with the advent of Ethereum. According to Hamilton, people now see stablecoins as assets instead of debt obligations for fiat.

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It is worth noting that firms still issue stablecoins as IOUs on the XRPL today. Recall that Bitstamp recently introduced EUR-backed IOUs on the XRPL, offering customers a gateway into the blockchain’s decentralized finance ecosystem.

Hamilton’s statements come as dollar-pegged stablecoins have recently faced heightened uncertainty. Firstly, Paxos faced enforcement action from the United States Securities and Exchange Commission (SEC), which labeled its Binance dollar stablecoin offering, Binance USD (BUSD), as an unregistered security. Now, a series of crypto-friendly bank collapses have created further uncertainty.

As highlighted in a previous report, Circle’s USDC lost its dollar peg over the weekend, dropping as low as $0.82 on Saturday after the Silicon Valley Bank collapse. It came as Circle confirmed that over $3 billion of USDC’s cash reserves were held with the bank.

Some confidence has returned to the market at press time as the FDIC assured it would cover all SVB deposits. USDC, recouping its losses, is now trading for $0.9912 on mainstream exchanges.

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