Last Friday, Kevin Paffrath, on his highly popular YouTube channel Meet Kevin, kicked off the discussion by highlighting Ripple’s landmark victory in July 2023, when the SEC declared that the XRP token is not inherently a security. Paffrath pointed out how this regulatory win was a pivotal moment for Ripple, setting a precedent for the company’s future endeavors without the overshadowing threat of regulatory complications.
As CryptoGlobe reported, Ripple, a frontrunner in blockchain and cryptocurrency solutions, announced on April 4 its intention to unveil a stablecoin tethered 1:1 with the US dollar later this year. This forthcoming stablecoin will be underpinned by US dollar deposits, short-term US government treasuries, and similar cash equivalents, assured by monthly validations from an independent accounting firm. Addressing a rising demand for dependable stablecoins, Ripple’s venture into this $150 billion market is forecasted to expand dramatically, potentially reaching over $2.8 trillion by 2028.
Brad Garlinghouse, CEO of Ripple, regards this venture as aligning with Ripple’s broader mission of bridging conventional finance with the digital currency realm. This effort is seen as a pivotal moment for the XRP Ledger community, promising enhanced liquidity, utility, and opportunities for developers and users alike.
The stablecoin will initially be accessible on the XRP Ledger (XRPL) and Ethereum (ETH) blockchains, with Ripple eyeing an expansion to other blockchains and decentralized finance (DeFi) platforms subsequently. Monica Long, President of Ripple, underscores the multi-chain strategy’s role in unlocking institutional and DeFi possibilities across diverse ecosystems, enhancing the XRP Ledger’s existing decentralized exchange and automated market maker functionalities.
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In his analysis, the highly regarded analyst explained this strategic move within the context of the existing stablecoin market, dominated by the likes of USDT (Tether) and USDC, highlighting the potential Ripple sees in diversifying its offerings. Despite the significant implications of this move, Paffrath noted the modest rise in XRP’s price:
“Tether has this market cap of about $106 billion. XRP right now sits at about a $33 billion market cap. It’s only up about 2.6% on the day, which is surprising. You would think it’d be up more on this announcement.“
Paffrath delved into the concept of stablecoins, shedding light on their role in providing stability within the volatile crypto market. By citing the example of Tether’s profitability, Kevin Paffrath illustrated the business model Ripple is aiming to emulate, emphasizing the financial viability of stablecoins and Ripple’s potential to capitalize on this with its established technology and market reputation:
“This makes a lot of sense for a company like Ripple to get into the stablecoin market just because they do have a reputation and they do have a large fan base... Great news for Ripple.”
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- Source: https://www.cryptoglobe.com/latest/2024/04/prominent-analyst-on-ripples-upcoming-xrpl-powered-usd-backed-stablecoin-this-changes-everything-for-ripple/
