Bittime - Ripple Company, known for its blockchain services for corporations and as the creator of XRP and XRP Ledger (XRPL), announced that it will issue its own stablecoin. This stablecoin will be pegged to the price of the United States dollar (USD).
"The stablecoin market is currently worth more than 150 billion US dollars and is expected to exceed 2.8 trillion US dollars by 2028," Ripple said in a statement.
"There is clearly a high demand for stablecoins that offer trust, stability, and utility."
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Will Launch at “End of Year”
Ripple said this token, which it plans to launch "later this year", will be backed 100% by US dollar deposits, short-term US government securities and other cash equivalent assets.
The stablecoin will be used on Ripple's XRP Ledger specifically for financial institutions, as well as the Ethereum blockchain, at least initially.
Also read: XRP Ledger (XRPL): Ripple Blockchain that Gets the Latest Update
Ripple's announcement comes as stablecoins have proven to be one of the most popular types of digital assets among crypto traders. Stablecoins are essentially free (in theory) from the wild price fluctuations that often occur in other cryptocurrencies, such as Bitcoin (BTC) and Ethereum (ETH).
"Our advantage is that the supporting assets consist of US dollars and US government debt securities - they are very stable," said Ripple CTO David Schwartz as quoted by CoinDesk.
"We're not looking for piecemeal profits. We want to be a major player in this market for the long term."
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As for why Ripple - which is still facing a legal case from the United States Securities and Exchange Commission (SEC) - jumped into the world of stablecoins, Schwartz said that part of its decision was based on a "lucrative business opportunity."
"This is a growing market," he said. "Imagine being a bank that doesn't have to pay interest. This looks like a great business opportunity."
Schwartz said the new stablecoin could also help increase activity in XRP Ledger's decentralized finance (DeFi) ecosystem, which currently has a decentralized exchange but usage is still relatively low compared to other blockchains.
Transparency - which has long been a major highlight for stablecoin issuers - will be a key focus for Ripple as it launches its new token, according to Schwartz.
"We will be undergoing monthly public audits, hopefully by a reputable accounting firm, and will provide more information on this later," Schwartz said.
"We aim for full transparency. We will do whatever is necessary to address the issue."
Also read: XRP Community Excited by Ripple CTO's Confused Tweet
Stablecoin Market Growth Potential
In addition to the promise of transparency, Schwartz emphasized the growth potential of the stablecoin market. Currently, the stablecoin market is dominated by Tether's USDT and Circle's USDC tokens.
This creates a disincentive for Ripple or other stablecoin providers to act fraudulently. Coinbase, a publicly traded US crypto exchange, is an investor in Circle.
"In the early days of Tether, people thought it would crash at any time and thought it was suspicious," said Schwartz. But now, "if you're Tether, it doesn't make sense for you to run off with people's money," Schwartz said.
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"Even if that was your plan, you would have waited to do it" because "the market is growing."
"In Ripple's case, we're not trying to make small profits at a time - we don't need to," said Schwartz. "Our financial condition is very strong."
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Also read:
XRP Breakout: Latest XRP (XRP) Price Analysis and Predictions
Ripple vs SEC Update: Ripple Has Submitted All Details Requested by SEC
Ripple (XRP): Will it Reach IDR 14,000 in 2024?
Ripple (XRP) Prediction: Will it Rise or Fall
DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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