NAIROBI (CoinChapter.com) — Ripple announced on Aug. 9, 2024, that it has begun beta testing its USD-backed stablecoin, Ripple USD (RLUSD), on both the XRP Ledger and Ethereum mainnet. The stablecoin, designed to maintain a 1:1 value with the U.S. dollar, is backed by dollar deposits, short-term U.S. government treasuries, and cash equivalents.
RLUSD remains unavailable to retail users during this initial testing phase, and Ripple’s enterprise partners are conducting trials.
Ripple plans to integrate Ripple Stablecoin into its cross-border payment solutions and DeFi protocols, aiming to increase its utility and demand for XRP. The company has warned against potential scams during this period, emphasizing the need for regulatory approval before the stablecoin becomes widely available.
Legal Victory Strengthens Ripple’s Position
Ripple’s recent legal win against the U.S. Securities and Exchange Commission (SEC) boosts confidence in Ripple Stablecoin. On Aug. 7, District Judge Analisa Torres rejected part of the SEC’s motion in its 2020 lawsuit against Ripple.
The court ruled that Ripple’s programmatic sales of XRP to retail investors did not violate securities laws, though institutional sales were considered investment contracts.
Ripple must pay a $125 million fine for 1,278 transactions that violated Section 5 of the Securities Act. With the lawsuit concluded and XRP not classified as a security, Ripple can now focus on expanding Ripple Stablecoin and XRP. This expansion could drive increased demand, especially in cross-border payments and DeFi.
Could Ripple’s Stablecoin Propel XRP Adoption?
Ripple’s entry into the stablecoin market aligns with projections of sector growth to $2.8 trillion by 2028. RLUSD, backed by U.S. dollar deposits and short-term treasuries, will integrate into Ripple’s cross-border payment solutions, potentially boosting XRP demand.
However, Ripple faces competition from market leaders Tether (USDT) and Circle (USDC), which control over 90% of the market.
Moreover, Ripple’s plans to extend RLUSD’s reach into decentralized finance (DeFi) protocols could further solidify XRP’s position in the market. The stablecoin’s role in providing liquidity and stability within these protocols could drive new opportunities for XRP, particularly if DeFi developers and users embrace RLUSD.
According to data from Santiment, following Ripple’s RLUSD announcement, wallets holding over 100,000,000 XRP increased their holdings. This accumulation suggests confidence in XRP’s potential tied to RLUSD. Smaller whale wallets showed more variability during the same period.
The large investors’ activity highlights their anticipation of RLUSD’s impact on XRP’s market demand.
As Rob Cunningham mentioned on X, RLUSD’s release under U.S. legislation underscores Ripple’s commitment to strict regulatory standards. Unlike Tether (USDT) and the Federal Reserve Note (FRN), RLUSD operates with full transparency, potentially attracting institutional investors.
Ripple’s adherence to regulatory standards strengthens its position in the digital monetary system, likely boosting XRP’s demand as the ecosystem expands.
Ripple’s native token, XRP, is currently trading at around $0.57, reflecting a 13.42% gain over the past seven days. The token’s market cap stands at $31.98 billion, with a 24-hour trading volume of $1.33 billion.
