Investors will be able to trade Ripple's new stablecoin beginning Tuesday, the company has said, after the New York State Department of Financial Services gave its approval earlier this month.
The U.S. dollar-backed stablecoin, called ripple USD, or RLUSD, will be issued on the ethereum blockchain and XRP ledger and first available on some global exchanges, with plans to expand to others in the coming weeks. It will not initially be available on Coinbase or Robinhood.
"Part of the impetus for us wanting to launch a stablecoin is the growth we've seen specifically in cross-border payments," Jack McDonald, Ripple's senior vice president of stablecoins, told CNBC. "As we've been using stablecoins more and more in our flows, that really piqued our interest that we should have our own native stablecoin that can be more cost effective and more operationally efficient to use."
The launch comes amid elevated hopes in the crypto industry for clearer and friendlier U.S. regulations in President-elect Donald Trump's upcoming term. The Securities and Exchange Commission, under crypto adversary Gary Gensler's leadership, famously made an example of Ripple in a 2020 lawsuit that claimed the company was selling XRP as an unregistered security offering. A judge handed Ripple a partial win in 2023, ruling that although XRP is a security when sold to institutions, it is not a security when sold to retail investors on exchanges.
The market cap for dollar-backed stablecoins has grown 50% this year and about 15% since the election. Tether (USDT) dominates about 70% of it, followed by Circle-issued USDC, which makes up about 20%.
"The feedback we're hearing from the market ... is that people are looking for an alternative to the incumbents — not necessarily to replace at full scale, but an alternative," McDonald said. "There is some concern about the concentration in the market today — [it's] certainly something that the regulators are looking at and new institutions coming on don't necessarily like that concentration."
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Ripple is a 12-year-old business-to-business payments firm that does much of its business outside the U.S., serving banks, payments companies and other financial institutions with a need for cross-border payments. Although stablecoins historically have been used for trading purposes, other use cases have emerged, and Ripple is primarily interested in having one to complement its existing business, according to McDonald.
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"There's a place in payments specifically for both XRP and for stablecoins," he said. "We've been a net mentor of other types of stablecoins over the years in our payments business, in addition to utilizing XRP where that makes sense. ... We'll continue to use both XRP and stables."
XRP is the native token of the open source XRP ledger and was created by the founders of Ripple in 2012. The company uses XRP in its cross-border payments business — about 95% of which takes place outside the U.S., and is the largest holder of XRP coins.
"As it relates to the fact that we are launching RLUSD on both ethereum and the XRP ledger, that does generate more need for XRP as that bridge asset on the XRP ledger, and so more credible assets that trade on the decks that exist within the XRP ledger is good for XRP."
Ripple announced earlier this year that it would bring a stablecoin to what has become an increasingly crowded sector of crypto — and one that had been growing even before the election. In November, Robinhood, crypto exchange Kraken, Galaxy Digital and others revealed they would launch a joint dollar-backed stablecoin, USDG, on a "Global Dollar Network." MercadoLibre also launched one, and fintech company Revolut is reported to be discussing a similar initiative.
