In 2020, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple and its co-founders, accusing them of violating securities laws by selling their native cryptocurrency XRP without registering it with the SEC. This action has brought significant attention to Ripple and its operations.
The CEO of Ripple, Brad Garlinghouse, recently announced that the company will be introducing a stablecoin to the market. This decision was made in response to the instability of other stablecoins, such as Tether’s USDT and Circle’s USDC. These stablecoins temporarily lost their $1 peg in 2022 and 2023, creating uncertainty in the market.
Ripple’s stablecoin will be first launched in the U.S., with potential plans to expand to other regions such as Europe and Asia. This move will put Ripple in competition with established stablecoin giants like Tether and USDC issuer Circle. However, Garlinghouse is confident in Ripple’s ability to succeed in the market, stating that the market will look different in the future.
Ripple’s stablecoin will also serve a purpose in the company’s On-Demand Liquidity product, which aims to settle transactions quickly between banks and other financial institutions using XRP as a “bridge” currency. However, Ripple has faced challenges in finding a use case for XRP with banks and payment firms. For example, Santander initially wanted to use XRP for cross-border payments but ultimately chose not to due to Ripple’s limited presence in the market.
Despite these challenges, Garlinghouse remains optimistic about the potential for XRP as a payment token. He also notes that stablecoins will complement and help grow the XRP ecosystem. In fact, the number one request from the XRP community is for a USD-backed stablecoin on the XRP Ledger.
Currently, Tether is the market leader for stablecoins with a market capitalization of $106.3 billion. However, concerns have been raised about the source of Tether’s reserves and its ability to withstand a “bank run.” In comparison, Ripple is a regulated institution with licenses in several countries.
In addition to its stablecoin announcement, Ripple is also facing a lawsuit from the SEC. The SEC is seeking $2 billion from Ripple for allegedly selling $728.9 million worth of XRP to institutional investors without registering the transactions. Garlinghouse believes that the total settlement will be much lower, in the “millions” rather than billions of dollars.
Overall, Ripple’s stablecoin and ongoing legal battles have brought significant attention to the company and its future in the cryptocurrency market.