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ripplethe parent company of XRP (XRP USD), has been in plenty of hot water in the past. From a long-running legal battle with the Securities and Exchange Commission (SEC) to other regulatory scrutiny, the Ripple team knows a thing or two about the changing regulatory landscape in the crypto world.
So, news Ripple has confirmed It will launch its first USD-pegged stablecoin on the XRP Ledger (XRPL), which is sure to excite some investors. This foray into what some are calling a $150 billion market appears to be exciting investors, with XRP once again rising more than 3.5% above the 60 cents per token mark in the past day.
Let’s explore what we think of this announcement and why it could be such a big deal for the Ripple/XRP team.
XRP is rising on news that Ripple will launch a US dollar-backed stablecoin
The stablecoin market has largely collapsed in 2022. With the failure of the then-high-profile Terra and the collapse of other similar algorithmic stablecoins, investors clearly sought safety in asset-backed tokens or other crypto assets considered stores of value, like for example Bitcoin (BTC USD) And ether (ETH-USD).
This move by Ripple to launch a US dollar-backed stablecoin signals the ongoing shift towards such assets. Investors want stability when holding funds for the short term, and assets backed by dollars certainly fit that mold.
Increased transaction activity using this token could lead to higher usage of XRPL over time. Since XRP is considered one of the best networks for institutional money transfers, the introduction of a stablecoin only strengthens the positioning of this project. I think it’s a smart move and a long time coming. But certainly the Ripple team probably wanted to wait for more clarity from regulators before announcing this move.
Ripple’s dollar-backed stablecoin is audited by third-party auditors and publishes monthly audit reports. In my opinion, this stablecoin could gain significant market share over the competition based solely on XRP’s market presence and loyal user base.
At the time of publication, Chris MacDonald did not hold, directly or indirectly, any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publication policies.