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Analysis: Ripple’s stablecoin approved says CEO Garlinghouse
December 11, 2024
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Ripple’s CEO Brad Garlinghouse said yesterday that the New York Department of Financial Services (NYDFS) has approved its stablecoin US dollar RLUSD, resulting in a 7% boost in the value of the XRP cryptocurrency. Ripple has not yet starting issuing it.

Earlier this year the announcement of plans for the stablecoin raised concerns amongst the XRP community. Wasn’t XRP meant to be an intermediary currency? Wouldn’t a dollar stablecoin replace that functionality?

However, if a Ripple stablecoin were to encourage more activity on the network, then it would be good for XRP’s other purpose – as the native currency of the XRP Ledger.

An approval by the NYDFS has another benefit. The regulator is rather fussy about which blockchains can be used by companies that hold its trust charter. So far it has only approved Ethereum and Solana which are used by Paxos which issues the PayPal USD stablecoin and its own Paxos dollar. Stablecoin issuer Circle is not a trust company and hence not subject to the same restrictions regarding blockchains.

In other words, with the NYDFS authorization, it’s not just Ripple that can issue regulated tokens on the XRP Ledger, but it makes it much easier for others to do so.

Given Ripple’s institutional focus, that matters. While Circle’s USDC is generally considered safe and regulated, a lack of a trust charter is a weakness from an institutional perspective. That’s not just our opinion. It’s also the view of S&P Global Ratings.

Will institutions adopt stablecoins?

The word institution is nowadays used to cover quite a range of organizations. There are TradFi institutions such as banks and asset managers. There are traditional money transfer businesses which have been Ripple’s sweet spot. Plus, there are a ton of new crypto institutions.

While banks are going to struggle with holding stablecoins because of Basel rules (for now), many around the world are engaging at an experimental level. We’ve written many times about the appeal of stablecoins for asset managers. And XRP holders don’t need to be told about the advantages for cross border payments. So institutional interest in every category is likely to grow very significantly.

The question is whether Ripple and RLUSD can ride the wave.

RLUSD and the competition

There’s an immense amount of competition, with new stablecoins being announced weekly. The recent Paxos announcement of the Global Dollar Network is particularly interesting and is attracting institutions by sharing revenues. USDC issuer Circle is actively targeting corridors in Latin America for corporate payments as illustrated in a recent stablecoin report.

There’s also a recognition about the increasing fragmentation of ledgers. One of the reasons why Solana has done so well of late is because it is not relying on layer 2 scaling solutions. The composable nature of blockchains makes being on the same chain an advantage. That matters for ‘crypto institutions’.

Look at how Ondo uses BlackRock’s BUIDL money market fund as a reserve asset. BUIDL was recently usurped in market capitalization by Hashnote’s US Yield Coin (USYC). Why? Because the Usual Protocol (and stablecoin) is using USYC for its reserves.

Being on the XRP Ledger makes it harder and riskier for protocols on other chains to use RLUSD. On the other hand, RLUSD could kick start more activity on the XRP Ledger. But given activity is currently greater elsewhere, a separate chain is a net disadvantage.

However, Ripple has two aces up its sleeve. One is it already has relationships with many money transfer businesses. Integrations for TradFi institutions are usually a hurdle. With Ripple’s acquisition of the custody firm Metaco, several banks are already integrated. However, apart from BBVA, which is exploring stablecoins with Visa, Metaco’s customers are not amongst the many banks that are embracing stablecoins.

On the other hand, the Ripple brand is associated with two things: cross border payments and fights with the SEC. Hopefully, the former will be the one that springs to mind.

The cart before the horse?

While there’s a lot of exciting happenings in the U.S., it’s worth putting the recent run up in prices into context. Today the market capitalization of the XRP token is around $134 billion. That’s an awful lot.

Last year, Ant Group, the owner of the Chinese payments firm Alipay, was valued at $75 billion. It has more than 1.3 billion users, around 80 million merchants and 650 million active monthly users. Plus, it has various investment and lending apps with serious volumes.

Before the November elections, the XRP Ledger had around 13,000 active wallets daily. Many of those are just trading XRP. But if we take a super optimistic view that they are all transacting for payments and there are 13,000 different wallets each day, that would amount to 390,000 active monthly users. It’s more likely a fraction of that.

Of course, Ant is not a perfect candidate for comparison. But it’s just worth asking if the cart isn’t coming before the horse. Ripple hasn’t even issued the stablecoin yet. It needs to demonstrate that it can get institutions to adopt the stablecoin, not just in announcements but at scale in real transactions. It needs to keep them using the stablecoin in the face of a torrent of competition. And if XRP is to benefit, it needs to attract significant other activity onto the XRP Ledger. The valuation appears to assume this is all guaranteed.

 

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US Dept of Commerce to publish GDP data on blockchain

On Tuesday during a televised White House cabinet meeting, Commerce Secretary Howard Lutnick announced the intention to publish GDP statistics on blockchains. Today Chainlink and Pyth said they were selected as the decentralized oracles to distribute the data.

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XDC: xdcc2C02203C4f91375889d7AfADB09E207Edf809A6

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List Of Cardano Wallets

Well-known and actively maintained wallets supporting the Cardano Blockchain are EternlTyphonVesprYoroiLaceADAliteNuFiDaedalusGeroLodeWalletCoin WalletADAWalletAtomicGem WalletTrust and Exodus.

Note that in case of issues, usually only queries relating to official wallets can be answered in Cardano groups across telegram/forum. You may need to consult with specific wallet support teams for third party wallets.

Tips

  • Its is important to ensure that you're in sole control of your wallet keys, and that the keys used can be restored via alternate wallet providers if a particular one is non-functional. Hence, put extra attention to Non-Custodial and Compatibility fields.
  • The score column below is strictly a count of checks against each feature listed, the impact of specific feature (and thus, score) is up to reader's descretion.
  • The table represents current state on mainnet network, any future roadmap activities are out-of-scope.
  • Info on individual fields can be found towards the end of the page.
  • Any field that shows partial support (eg: open-source field) does not score the point for that field.

Brief info on fields above

  • Non-Custodial: are wallets where payment as well as stake keys are not shared/reused by wallet provider, and funds can be transparently verified on explorer
  • Compatibility: If the wallet mnemonics/keys can easily (for non-technical user) be used outside of specific wallet provider in major other wallets
  • Stake Control: Freedom to elect stake pool for user to delegate to (in user-friendly way)
  • Transparent Support: Easy approachability of a public interactive - eg: discord/telegram - group (with non-anonymous users) who can help out with support. Twitter/Email supports do not count for a check
  • Voting: Ability to participate in Catalyst voting process
  • Hardware Wallet: Integration with atleast Ledger Nano device
  • Native Assets: Ability to view native assets that belong to wallet
  • dApp Integration: Ability to interact with dApps
  • Stability: represents whether there have been large number of users reporting missing tokens/balance due to wallet backend being out of sync
  • Testnets Support: Ability to easily (for end-user) open wallets in atleast one of the cardano testnet networks
  • Custom Backend Support: Ability to elect a custom backend URL for selecting alternate way to submit transactions transactions created on client machines
  • Single/Multi Address Mode: Ability to use/import Single as well as Multiple Address modes for a wallet
  • Mobile App: Availability on atleast one of the popular mobile platforms
  • Desktop (app,extension,web): Ways to open wallet app on desktop PCs
  • Open Source: Whether the complete wallet (all components) are open source and can be run independently.

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XRP: r9pid4yrQgs6XSFWhMZ8NkxW3gkydWNyQX
XLM: GDMJF2OCHN3NNNX4T4F6POPBTXK23GTNSNQWUMIVKESTHMQM7XDYAIZT
XDC: xdcc2C02203C4f91375889d7AfADB09E207Edf809A6

 

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