The reason why Ripple is launching a stablecoin

Strictly speaking, the stablecoin market does not live up to its name. That's because there are really only two providers that share trading of U.S. dollar-denominated cryptocurrencies between them: Circle and Tether. Together, their tokens USDC and USDT account for about 90 percent of the total market capitalization. Ripple now wants to break this dominance. At Paris Blockchain Week, CEO Brad Garlinghouse explained what needs to happen for this endeavor to succeed and what obstacles stand in the way of Ripple's stablecoin.

Overall, the growth potential of the market is huge. The total market capitalization of $150 billion could "twenty-fold" to $2.5 to $3 trillion in the next four to five years, Garlinghouse explains. That would be more than the current value of the entire crypto market. "Ripple has to play a role in this," the 53-year-old continued.

This would first require a robust banking infrastructure to which stablecoin would be connected. This is where Ripple's long-standing partnerships with the banking sector are proving to be a major mainstay.

Does regulatory uncertainty in the U.S. act as a brake?

It is indeed an ambitious and risky move that Ripple is pulling out of its top hat. After all, with the focus on developing and issuing a stablecoin listed in U.S. dollars from the United States, the project is being launched in a jurisdiction where the regulatory handling of these stable cryptocurrencies is not yet regulated at all. Several bills are currently being discussed. But nothing has been finalized yet.

However, Garlinghouse expects a decision in the medium term: before a "stablecoin bill": "I believe we will see a corresponding legal framework after the election, even before actual crypto-regulation." He is not alone in this. Industry peer Jeremy Allaire, CEO of Circle, recently expressed similar optimism.

"There is now clarity on XRP in the U.S."

However, Garlinghouse emphasizes that there is now reasonable clarity on at least two crypto-assets. On the one hand, Bitcoin has finally established itself in the traditional financial market thanks to the approval of spot ETFs in January. On the other hand, there is Ripple's native coin, XRP. After a lengthy legal dispute with the U.S. Securities and Exchange Commission (SEC), the competent court ruled in favor of Ripple last July. Reason enough for Garlinhouse to reiterate, "In the U.S., there are only two crypto-assets for which there is regulatory clarity: Bitcoin. And because of the past legal dispute, we also know that XRP is not a security."

In the context of the planned stablecoin, this is an important classification for Ripple. In addition to Ethereum, the cryptocurrency will also run on the XRP blockchain. However, it remains to be seen exactly when the new product will be launched and on which exchange the coin will be launched. In the press release, Ripple assumed a launch during the year.