Ripple, the parent company of XRP (XRP-USD), has been in plenty of hot water in the past. From a long-standing legal battle with the Securities and Exchange Commission (SEC) to other regulatory scrutiny, the Ripple team knows a thing or two about the shifting regulatory landscape in the crypto world.
So, news that Ripple has confirmed it will launch its first USD-pegged stablecoin on the XRP Ledger (XRPL) certainly has some investors excited. This move into what some are estimating to be a $150 billion market appears to have investors excited, with XRP surging more than 3.5% over the past day above the 60 cent per token level once again.
Let’s dive into what to make of this announcement and why it could be such a big deal for the Ripple/XRP team.
XRP Soars on News Ripple Will Launch a U.S. Dollar-Backed Stablecoin
The stablecoin market is one that was largely shot in 2022. With the failure of then-high-profile Terra and the collapse of other similar algorithmic stablecoins, investors clearly sought safety in asset-backed tokens or in other crypto assets seen as stores of value, such as Bitcoin (BTC-USD) and Ethereum (ETH-USD).
This move by Ripple to launch a U.S. dollar-backed stablecoin signals the continued shift into such assets. Investors want stability when they’re holding funds over the short term, and assets that are backed by dollars certainly fit this mold.
Increased transaction activity using this token could translate into higher usage for the XRPL over time. With XRP being viewed as one of the best networks for institutional money transfers, the introduction of a stablecoin only furthers this project’s positioning. I think it’s a smart move and a long time coming. But certainly, the Ripple team likely wanted to wait for more clarity from regulators before announcing this move.
Ripple’s dollar-backed stablecoin will be audited by third-party accountants, and will publish monthly attestation reports. In my view, this stablecoin could garner a significant share against rivals simply due to XRP’s prevalence in the market and its loyal user base.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
