Ripple To Launch a Stablecoin Backed by the US $
As part of a wave of new entrants into the cryptoasset market long dominated by Tether Holdings Ltd., blockchain company Ripple Labs Inc. intends to launch its own stablecoin valued in dollars.
According to Chief Executive Officer Brad Garlinghouse, trading for Ripple’s stablecoin, which is intended to have a fixed value of $1, will begin later this year. It will have a one-to-one reserve of short-term US government bonds, US dollar deposits, and other cash equivalents as collateral.
According to Garlinghouse, the token will be issued on Ethereum and the XRP blockchain, which Ripple helped build. However, the exchanges on which it will first trade have not yet been decided.
A particular kind of cryptocurrency known as a “stablecoin” provides protection against market volatility by linking its value to another asset, usually the US dollar. According to statistics from DeFiLlama, just two tokens—Tether’s USDT and Circle Internet Financial Ltd.’s USDC—account for around 90% of the $153 billion stablecoin market, with over 100 additional issuers fighting for the remaining 10%.
In recent months, a number of businesses, including one supported by German asset management DWS Group, have declared their intentions to enter the market.
The son of seasoned investment manager Jan Van Eck, Nick van Eck, announced his debut into the competitive market this week.
With the backing of an investment firm, Van Eck Scion launches Stablecoin.
Despite the intense competition, the introduction of stablecoins has become more alluring due to an increase in bond rates, as this results in increased profits from the assets that issuers hold to support their tokens.
The third-party accounting firm that Ripple has not yet hired will do the attestations, which the company intends to disclose on a monthly basis on the reserves of its stablecoin, according to Garlinghouse. According to him, details on the banking partners the company uses to hold assets would be included in the attestations.