The Blubber

Ripple, $XRP, plans to launch its own stablecoin pegged to the U.S. dollar across the Ethereum and XRP Ledger blockchains.

Ripple has announced that its stablecoin will always be backed 1-to-1 by an equivalent sum of assets, including U.S. dollar deposits, U.S. government bonds, and cash equivalents held in reserve. The company stated that its reserves would be accounted for in publicly available monthly attestation reports, but did not disclose the auditing firm.

The initial launch of Ripple's stablecoin will be in the U.S., but the company has not ruled out offering additional regional products in non-U.S. markets such as Europe and Asia. This move will position Ripple against stablecoin giants like Tether, the issuer of the largest stablecoin USDT, and Circle, the issuer of USDC.

In contrast, payments giant PayPal recently launched its own U.S. dollar stablecoin called PayPal USD, which is backed by U.S. dollars and issued by crypto firm Paxos.

Despite the competition, Ripple CEO Brad Garlinghouse remains optimistic, stating, "This market will look different [in the future], certainly based on size," in an interview with CNBC.

Garlinghouse explained that Ripple decided to introduce a stablecoin to the market last year in response to the "depegging" of Tether's USDT token and Circle's USDC. USDT temporarily lost its $1 peg in 2022 due to market instability caused by the collapse of terraUSD, an algorithmic stablecoin. Similarly, USDC temporarily slipped below $1 in 2023 after revealing exposure to the collapsed tech-focused lender Silicon Valley Bank.

While some critics question the source of Tether's reserves and doubt the company's capitalization, Tether maintains that its token is fully backed by quality reserves and has always been able to meet withdrawals, even in times of distress.

Garlinghouse highlighted that there is "some uncertainty" about the current market leader among U.S. regulators, without disclosing a name. He emphasized that Ripple is a regulated institution with licenses in New York, Ireland, Singapore, and other countries.