Ripple Prepares to Launch US Dollar Stablecoin, Competing with USDT and USDC

Ripple estimates the stablecoin market will surpass $2 trillion by 2028 and aims to compete with Circle's USDC and Tether's USDT.

XRP issuer Ripple has announced plans to launch a stablecoin backed by the United States Dollar (USD) and hopes to compete with Circle and Tether for a share of the market share in the next five years.

Ripple Chief Technology Officer David Schwartz outlined plans for a stablecoin that will initially be issued on the XRP Ledger and Ethereum blockchain.

Ripple has been thinking about launching a stablecoin for more than a year, and Schwartz believes that the existing stablecoin ecosystem has not been as uniform and strong as it should be. Stating the current value of the stablecoin market at $150 billion, Schwartz said that there is still room for other big players:

“We think it will exceed $2 trillion by 2028, and currently there are only two market leaders. We don't think that this is a winner-takes-all ecosystem, especially on the DeFi side.”

Ripple’s stablecoin will be pegged at a 1:1 ratio to the United States Dollar, and the company plans to back the token with US Dollar deposits, short-term US Treasury Securities, and other “cash equivalents.” Schwartz said that Ripple will emulate Circle's focus on compliance and will likely compete with USD Coin (USDC):

“Our approach will be very ‘compliance-first.’ We are very transparent about how the assets are backed, so we will compete directly with USDC. We are looking for market share. "We're not looking to optimize a few extra decimal digits by taking risks with other people's money," added Schwartz when asked about Ripple's plans to back stablecoins with dollar deposits, US Treasuries and cash equivalents.

These reserve assets will be audited by a third-party accounting firm, and Ripple will publish monthly statements. Schwartz drew comparisons to the early days of Tether's USDT stablecoin, where critics often warned about the potential for issuers to steal funds and trust in the reserves.

Ripple is interested in issuing stablecoins while remaining positioned as a token for real-time gross settlement systems, currency exchanges, and remittance networks that primarily serve financial institutions.

Schwartz said that Ripplenet serves non-bank payment companies that use XRP for transparent payments. However, there are some markets that these companies cannot access using XRP or complete liquidity.

The introduction of the Ripple stablecoin will also complement the recent launch of an automated market maker (AMM) in the ecosystem. Schwartz said that stablecoins will provide liquidity and provide volatility and arbitrage opportunities between multiple assets.