Ripple, the company behind XRP, has revealed its plans to enter the stablecoin arena with a U.S. dollar-backed stablecoin, aiming to carve out market share from leading entities like Circle and Tether in the next half-decade.

In a conversation with Cointelegraph, Ripple's Chief Technology Officer, David Schwartz, shared insights about the upcoming stablecoin, which is set to debut on the XRP Ledger and Ethereum blockchain.

“The question you ask, we don’t have an answer to yet. What’s the ticker going to be, and what we’re going to call it? You’re just going to have to call it the Ripple stablecoin for now,” Schwartz commented in a video interview.

Ripple has considered launching a stablecoin for more than a year, with Schwartz critiquing the current lack of diversity and robustness within the stablecoin market.

Estimating the market's value at $150 billion, Schwartz anticipates growth to $2 trillion by 2028 and sees room for more significant players:

“We think it will be over $2 trillion by 2028, and there’s only two market leaders. We don’t think it’s a winner-take-all-all ecosystem, particularly on the DeFi side.”

The forthcoming Ripple stablecoin will maintain a 1:1 peg with the U.S. dollar and be supported by U.S. dollar deposits, short-term U.S. government securities, and similar cash equivalents.

Echoing Circle’s compliance-centric approach, Schwartz outlined Ripple’s intention to prioritize transparency and compliance, positioning it as a direct competitor to the USD Coin (USDC):

“Our angle is going to be very ‘compliance-first.’ We’re very transparent about how the assets are backed, so we’re kind of going to be directly competing against USDC.”

Addressing the backing of the stablecoin, Schwartz emphasized Ripple’s commitment to security and compliance, contrasting it with concerns raised in the early days of Tether about the security of funds and the integrity of reserve attestations.

“Initially when Tether first launched, a big concern was whether these guys would run off with all the money because they’re very incentivized to do that.

Then, after a while, ‘you’re like, wait a minute, these guys have a long-term business,’” Schwartz recounted.

With ambitions to break into the stablecoin sector, Ripple counts on its established reputation and financial stability to address potential concerns about entering this market segment.

“I think we have a credible claim to be in the conversation near the top. If at the end of two years, we’re number three, but the market has grown to 10 times what it is today, that’s still pretty good,” Schwartz noted.

Cointelegraph also inquired about Ripple's motivation for introducing a stablecoin given XRP's role in their real-time gross settlement system, currency exchange, and remittance network.

Schwartz highlighted the complementary nature of the stablecoin to Ripplenet’s services, allowing access to markets otherwise inaccessible with XRP alone.

“Having multiple paths to give customers a better experience means you have more customers. If we only did things with XRP, then where XRP wasn’t available, we would just have to tell a customer no,” Schwartz stated.

He further explained that the Ripple stablecoin is expected to enhance liquidity within their ecosystem and seize opportunities for volatility and arbitrage across different assets.

Sources:

https://cointelegraph.com/news/ripple-announces-stablecoin-launch

https://www.thebanker.com/Ripple-to-launch-USD-pegged-stablecoin-on-XRP-ledger-and-Ethereum-1712314829