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Tether, And Circle To Be Challenged In The $150 Billion Market By Ripple Through Launch Of U.S. Dollar Stablecoin

Tether, And Circle To Be Challenged In The $150 Billion Market By Ripple Through Launch Of U.S. Dollar Stablecoin
The $150 billion stablecoin market has seen the entry of crypto firm Ripple, which has introduced a digital currency based on the US dollar. According to Ripple, the stablecoin will always be backed 1-to-1 by an equivalent amount of assets that the business keeps in reserve, such as US dollar deposits, US government bonds, and cash equivalents.
The cryptocurrency company promised to make its reserves transparent through monthly attestation reports. The name of the auditing firm was left out. Although Ripple is initially introducing its stablecoin in the United States, it hasn't ruled out providing other regional goods in areas outside of the country, such as Europe and Asia.
With this change, Ripple would go up against major stablecoins like Tether, the company behind the biggest stablecoin, USDT, and USDC issuer Circle.
The massive payments company PayPal, meanwhile, introduced PayPal USD, a stablecoin backed by US dollars and dollar equivalents and distributed by cryptocurrency startup Paxos.
However, Brad Garlinghouse, CEO of Ripple, stated that he is unaffected by the rivalry. In an interview last week, he stated, "This market will look different [in the future], certainly based on size."
According to Garlinghouse, the corporation "depegged" competing companies Tether's USDT token and Circle's USDC, which prompted them to launch a stablecoin last year.
Due to market turbulence brought on by the demise of terraUSD, a well-known so-called algorithmic stablecoin, USDT momentarily lost its $1 peg in 2022.
In 2023, USDC also momentarily fell below $1 following disclosures of exposure to the bankrupt Silicon Valley Bank, which had a strong tech focus.
Some detractors question Tether's reserve source and question if the business is well-capitalized enough to withstand a "bank run."
As for Tether, it claims that even during difficult times, its token has always been able to cover withdrawals since it is entirely backed by high-quality reserves.
Without naming the company, Garlinghouse stated that there is "some uncertainty" over the market leader at the moment among US authorities. He maintained that Ripple is a licenced organisation that holds licences in a number of nations, including Singapore, New York, and Ireland.
Based on CoinGecko data, Tether is the largest stablecoin issuer globally, with a market valuation of $106.3 billion.
A Tether representative responded, "We wish Ripple's team would have more success with their new stablecoin than they had so far," in response to questions regarding Ripple's decision to introduce a stablecoin and Garlinghouse's remarks.
Being registered with the US financial crimes enforcement network (FinCEN) does not equate to regulation for Tether. Reports on questionable transactions and transactions above $10,000 must be sent by the company.
A stablecoin from Ripple would also fulfil a claim made by the cryptocurrency behemoth regarding its On-Demand Liquidity offering, which is to quickly settle trades between banks and other financial institutions by utilising the XRP token as a "bridge" currency.
Finding a use case for Ripple with banks and payment companies has been difficult for the company.
At first, Santander intended to use XRP for international payments, but it decided against it when it discovered that Ripple wasn't yet active in enough areas to meet its requirements.
MoneyGram terminated their collaboration with XRP for international transfers, citing rising expenses related to forming alliances with exchanges and other required counterparties in regional marketplaces.
Garlinghouse said that stablecoins would function more as an add-on to the XRP ecosystem and that Ripple hasn't given up on XRP as a payment asset.
“We’ve been using stablecoins in our payment flows for years,” he said. “This is not a new thing for us.”
He went on to say that other blockchain networks with their own tokens, referred to as Layer 1 protocols, have introduced stablecoins and seen increases in volume and liquidity overall.
"We believe that having native XRP ledger liquidity pools enhances and expands the XRP ecosystem," Garlinghouse stated. "To introduce a stablecoin backed by the USD on the XRP Ledger is actually the most frequent request we receive from the XRP community."
Based on statistics from CoinGecko, XRP has increased by around 13% in the past year and is presently trading at 57 cents.
In 2020, the U.S. Securities and Exchange Commission filed a lawsuit against Ripple, alleging that the business had sold XRP to investors in violation of the law when it ought to have reported the transactions to the agency.
A court judge recently declared that although XRP is not a security in and of itself, transactions to institutions must be considered illegal securities sales.
The U.S. District Court for the Southern District of New York claims that the blockchain corporation sold hedge funds and other sophisticated buyers $728.9 million worth of its XRP token.
In its case, the SEC is requesting $2 billion from Ripple.
According to Garlinghouse, the SEC's request is irrational because it only concerns the $728.9 million worth of XRP that the business sold to institutions.
Instead of billions of dollars, he anticipates that the entire compensation will be in the "millions" of dollars.
There were no comments on the issue from the SEC.

Christopher J. Mitchell

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