Ripple has finally secured an approval for its first stablecoin, RLUSD from New York’s financial regulators.
On Tuesday, the CEO of Ripple, Brad Garlinghouse, announced that the New York State Department of Financial Services (NYSDFS) has officially approved RLUSD.
This approval is a significant achievement for Ripple, opening the door to the highly regulated stablecoin market.
RLUSD aims to provide a stable digital currency option, reducing the price swings often associated with Ripple’s primary cryptocurrency, $XRP.
The stablecoin is designed to cater to both individual and institutional users looking for less volatile digital assets.
Ripple’s approval also includes a limited-purpose trust charter, which lets the company avoid some of the challenges faced by traditional financial institutions.
Ripple’s president, Monica Long, described RLUSD as “complementary and additive” to $XRP. She explained that this approach helps Ripple meet the needs of a wide range of users while strengthening its position in the digital currency space.
Competing in the stablecoin market
RLUSD was first introduced in April 2024, and Ripple is now positioning it as a competitor to major stablecoins like Tether’s $USDT and Circle’s $USDC. These two stablecoins currently dominate the market, with a combined valuation of $180 billion.
Ripple has ambitious plans for RLUSD, projecting it could achieve a $2 trillion market valuation by 2028. To prepare for this competition, Ripple tested RLUSD on the XRP Ledger and Ethereum mainnets starting in August.
By October, the company had formed partnerships with major exchanges like Uphold, Bitstamp, MoonPay, and others to make RLUSD widely accessible. These partnerships were critical in readying the stablecoin for launch and adoption.
The president of Enterprise at MoonPay, Keith Grossman, welcomed Ripple’s entry into the market. “Well-regulated companies like Ripple are vital for building trust and driving innovation in global finance”, he said.
Ripple’s CEO has promised further announcements about RLUSD’s exchange listings and new partnerships in the near future, which will help the company compete directly with existing stablecoins.
Challenges and the road ahead
Even with the NYSDFS approval, Ripple still has hurdles to overcome. The company needs a BitLicense, which is required for offering trading and custody services in New York.
Securing this licence will put Ripple alongside established stablecoin providers like Paxos and Gemini.
Ripple also continues to face a legal battle with the US Securities and Exchange Commission (SEC) over whether $XRP should be classified as a security.
Garlinghouse has dismissed the SEC’s claims as unfounded, stating confidently that $XRP does not meet the definition of a security.
He emphasised the need for clear regulations in the US to prevent companies from moving to countries with less oversight. “Uncertainty in regulations is pushing businesses away”, he said during a recent CBS interview.
Legal expert John E. Deaton has also expressed optimism about Ripple’s legal challenges. He pointed out support from some SEC commissioners who believe the agency’s appeal against Ripple should be dismissed.
If the case is resolved in Ripple’s favour, it could unlock new opportunities for the company in the US market.
Looking towards the future
Ripple’s stablecoin RLUSD is expected to play a key role in connecting traditional finance with blockchain technology.
Its integration with Ripple’s XRP Ledger, known for speed and low costs, makes it a compelling choice for users seeking efficient financial solutions.
Despite these advantages, Ripple faces stiff competition from established players and market challenges. However, the company has shown resilience, completing 95% of its business outside the US.
It has also maintained financial strength, including a $285 million share buyback earlier this year.
Garlinghouse remains optimistic about Ripple’s trajectory. With increasing regulatory clarity and strong partnerships, RLUSD is well-positioned to gain traction in the growing stablecoin market.
Ripple’s next steps will involve scaling RLUSD and navigating legal and competitive pressures to ensure its success.
