Ripple CEO Garlinghouse announces approval of stablecoin: Analysis

CEO Brad Garlinghouse announced yesterday that the New York Department of Financial Services has given the green light to Ripple’s stablecoin, RLUSD. This approval caused a 7% increase in the value of the XRP cryptocurrency, even though Ripple hasn’t actually started issuing the stablecoin yet.

When plans for the stablecoin were first revealed earlier this year, some in the XRP community were concerned. They wondered if a dollar stablecoin would replace XRP’s role as an intermediary currency. However, if the stablecoin leads to more activity on the network, it could actually benefit XRP as the native currency of the XRP Ledger.

The NYDFS approval is a significant milestone for Ripple. The regulator is selective about which blockchains can be used by companies with its trust charter, having only approved Ethereum and Solana so far. This paves the way not only for Ripple to issue regulated tokens on the XRP Ledger, but also for others to do the same more easily.

Stablecoins are gaining traction among various types of institutions, from banks to asset managers to new crypto companies. While banks may face challenges holding stablecoins due to regulatory rules, there is growing interest in stablecoins for cross-border payments and other financial activities.

Competition in the stablecoin space is fierce, with new stablecoins being introduced frequently. Ripple’s RLUSD will face competition from established stablecoin issuers like Paxos and Circle, but being on the XRP Ledger could give it an edge.

Ripple has some advantages, including existing partnerships with money transfer businesses and a focus on cross-border payments. However, the company needs to demonstrate that it can get institutions to adopt RLUSD on a large scale and attract significant activity to the XRP Ledger.

Overall, the recent developments are promising, but it remains to be seen how Ripple’s stablecoin will fare in a competitive market and whether it can deliver on its potential to benefit XRP and the XRP Ledger.