Ripple continues to build on its strong foundation in blockchain-powered cross-border payments with new products and services designed to meet the needs of a broader set of stakeholders. The upcoming launch of Ripple USD (RLUSD) is the most recent in an ongoing effort to bridge blockchain and traditional finance and provide modern financial solutions that are fit for purpose for banks, crypto exchanges, fintechs and more.
RLUSD is a type of stablecoin designed specifically for enterprise use cases like payments. With a focus on stability, efficiency and transparency, RLUSD is poised to enhance Ripple’s cross-border payments solution and meet the growing demand for USD-denominated transactions.
Recently, Ripple President Monica Long sat down with The Scoop’s Frank Chaparro to share the story behind RLUSD’s launch and what it means for the future of digital payments.
Types of Stablecoins in Payments
Stablecoins are a type of digital currency designed to maintain the value of fiat assets, like the US dollar, or assets like commodities. Fiat-backed stablecoins, which are backed by reserves of traditional fiat currency and usually subject to regulatory oversight, are considered among the most reliable and trusted in the market today. The aim of these assets is to combine the security, speed and scalability of blockchain with the stability of traditional currencies to provide more accessible and practical on- and off-ramps for crypto transactions.
By mitigating the volatility inherent in other types of crypto assets, stablecoins have also become a viable gateway for new users to more confidently embrace crypto and blockchain solutions. In 2022 alone, fiat-backed stablecoins facilitated nearly $7 trillion in transactions—surpassing even major global networks like Mastercard and PayPal.
While Ripple’s enterprise blockchain solutions have expanded to serve broader financial use cases like asset tokenization and custody, cross-border payments was Ripple’s first use case for blockchain technology. In the interview, Long shares how Ripple Payments has used crypto technology to process over $70 billion in payments to date, and that the launch of RLUSD gives providers another blockchain-powered payment option for fast, secure and low-cost cross-border transactions.
She indicated the launch is in direct response to growing demand for USD-denominated stablecoins, especially in regions like APAC, the EU and Australia. With stablecoin supply on the rise—currently boasting a market cap of ~$170 billion and with projections of nearly $3 trillion within the next five years—Ripple sees an opening to meet the diverse needs of its global payments customers.
Maximizing Payment Efficiency
Within Ripple Payments, the digital asset XRP is a vital bridge asset for more complex currency flows, particularly in long-tail corridors with lower liquidity. In cases where transactions involve less liquid currencies or tokens, the use of the XRP digital asset for payments can provide a more direct transaction path, drastically reducing time and fees, which Long noted can sometimes exceed 10% in certain markets.
The integration of RLUSD is both additive and complementary to XRP. There are many use cases where customers may want to hold, buy or trade tokenized USD onchain, and RLUSD provides speed, transparency and cost savings along with multi-chain issuance and programmable options. And for major currency corridors with high liquidity where XRP is not required as a bridge asset, RLUSD can still deliver those same advantages.
This combination of RLUSD for dollar-denominated transactions and XRP for cross-currency settlements ensures Ripple Payments customers can utilize the most efficient and cost-effective path no matter the circumstances.
Long also pointed out that RLUSD delivers value for developers, too. The U.S. dollar has long been the on-ramp for the crypto industry, serving as the primary means for buying and trading digital assets. By natively issuing RLUSD on both the XRP Ledger (XRPL) and Ethereum blockchains, Ripple enables developers to tap into more use cases, particularly within the decentralized finance (DeFi) space, where crypto stablecoins are a key ingredient.
The upcoming deployment of RLUSD on the XRP Ledger gives developers the foundation they need to build scalable, impactful DeFi applications, further expanding what’s possible for the broader XRP Ledger community.
Keys to Stablecoin Success
While there are many different types of stablecoins, Long highlighted that the success of any stablecoin hinges on two critical factors: regulatory clarity and stability. Smart, clear regulations are essential for fostering institutional adoption of digital assets and are key to driving innovation.
Where governments have provided the regulatory frameworks necessary for crypto stablecoins and other digital assets to flourish, companies like Ripple are seeing more success. The U.S. is beginning to follow suit, with bipartisan support for the Clarity for Payments Stablecoin Act—a crucial bill that could unlock stablecoin innovation. Importantly, RLUSD is built upon Ripple’s compliance-first mindset, making it well-suited to thrive within these environments.
But regulatory clarity is only part of the puzzle. Customers lean on stablecoins for their stability and RLUSD is rooted in trust and transparency. It is valued 1:1 to the U.S. dollar and 100% backed by a segregated reserve of U.S. dollar deposits, short-term U.S. government treasuries and other cash equivalents. These reserve assets are audited by a third-party accounting firm and Ripple plans to publish monthly attestations.
Further, Ripple plans to issue RLUSD via a New York Trust license through its acquisition of Standard Custody, a more robust strategy compared to issuance via a money transfer license (MTL). The NY DFS’ guidance on stablecoin issuance requires issuers like Ripple to maintain reserves of at least 100% of the nominal value of outstanding stablecoins in low-risk, highly liquid assets. This helps ensure that RLUSD’s reserves are managed with the highest levels of oversight and transparency.
The Future of Payments
While the company has expanded its offerings as a holistic digital asset infrastructure provider, Ripple USD is laser-focused on solving real-world payments challenges for businesses and institutions—further solidifying that payments remains a killer use case for blockchain and digital asset technology.
As Long noted, blockchain solutions are here to stay and Ripple is committed to leading the charge. By offering the stability of a USD-backed stablecoin alongside the liquidity benefits of XRP, Ripple Payments provides customers with more tools and paths to achieve efficiency and transparency.
Check out the full interview with Monica Long on The Block for the latest on XRP, Ripple USD, payments and more.
