Will Ripple's RLUSD digital currency regain dominance in the payment sector?
Ripple Tests New Stablecoin for Cross-Border Payments
Ripple, the cryptocurrency payments fintech company, has begun testing its new stablecoin, Ripple USD (RLUSD). The stablecoin is designed to support low-volatility transactions, compliance, and transparency—key factors for enterprise adoption and broader use in digital payments.
RLUSD is issued by Standard Custody & Trust Company, which Ripple acquired in June. The acquisition is a significant strategic move for the company, according to Ripple's CTO, David Schwartz.
The stablecoin is set to enter a crowded USD dollar-pegged stablecoin market. However, RLUSD's integration with payment ecosystems, regulatory compliance, and transparency could help it stand out.
For instance, RLUSD is backed 1:1 by cash and cash-equivalent reserves, including U.S. government bonds, with monthly CPA attestations. This enhances trust among institutional users and merchants, which is crucial for cross-border payment flows.
Recently, Mesh, a digital payments provider, integrated RLUSD, expanding stablecoin payment options for users and merchants. This integration facilitates deposits, transfers, and merchant payments with low volatility, broadening RLUSD’s reach in commerce.
Moreover, by adopting Chainlink’s high-quality price feeds, RLUSD enhances its integration with DeFi applications on Ethereum and the XRP Ledger. This increases RLUSD’s utility in both traditional and decentralized finance contexts.
Ripple's stablecoin offering is not intended to replace XRP, but rather to complement it. RLUSD is positioned as a stable settlement tool that complements XRP, which remains optimal for transaction fees and liquidity bridging on the XRP Ledger. Increased RLUSD usage may drive higher XRP transaction volumes, supporting Ripple's ecosystem growth.
Ripple is looking to re-engage with the cross-border payments industry, particularly in the US. The rollout of RLUSD could potentially help Ripple rebuild its position in the cross-border payments market, which totaled $190.1tn in 2023, according to Market Sizing Data.
While initially enterprise-focused, RLUSD is gaining traction among retail users and platforms, increasing its overall adoption and network effects across various user segments. Together, these developments suggest that RLUSD strengthens Ripple's infrastructure for fast, cost-effective, compliant cross-border payments, offering a regulatory-friendly stablecoin solution that can facilitate broader adoption and help Ripple reclaim market share in the cross-border payment sector.
However, RLUSD functions as part of a larger ecosystem where XRP continues to play a crucial role, so RLUSD is more of a complementary innovation than a standalone replacement in Ripple’s cross-border strategy.
[1] Ripple. (2022, October 5). Introducing Ripple USD (RLUSD): A Regulated, Dollar-Backed Stablecoin for Payments. Retrieved from https://ripple.com/insights/introducing-ripple-usd-rlusd-a-regulated-dollar-backed-stablecoin-for-payments/
[2] Ripple. (2022, September 29). Ripple USD (RLUSD) Now Live on Ethereum and XRP Ledger. Retrieved from https://ripple.com/news/ripple-usd-rlusd-now-live-on-ethereum-and-xrpl-ledger/
[3] Ripple. (2022, October 20). Ripple USD (RLUSD) Gains Traction Among Retail Users and Platforms. Retrieved from https://ripple.com/news/ripple-usd-rlusd-gains-traction-among-retail-users-and-platforms/
[4] Ripple. (2022, October 13). Ripple USD (RLUSD) and XRP: A Complementary Approach to Cross-Border Payments. Retrieved from https://ripple.com/insights/ripple-usd-rlusd-and-xrp-a-complementary-approach-to-cross-border-payments/
[5] Ripple. (2022, September 27). Ripple Acquires Rail for Stablecoin Services and Global Enterprise Payments Expansion. Retrieved from https://ripple.com/news/ripple-acquires-rail-for-stablecoin-services-and-global-enterprise-payments-expansion/
[1] The strategic acquisition of Standard Custody & Trust Company by Ripple indicates a step towards expanding their business in technology-driven financial services, focusing on market sizing opportunities in the cross-border payment industry.
[2] With RLUSD's integration into DeFi applications on Ethereum and the XRP Ledger, Ripple is exploring new avenues in finance, aiming to appeal to a broader base of institutional users and merchants, strengthening its position in the technology-infused global payment market.
