Ripple Labs’ RLUSD stablecoin: Everything you need to know

What is Ripple Labs’ RLUSD stablecoin?

As a seasoned crypto enthusiast with years of experience navigating the volatile digital asset market, I must say that the arrival of RLUSD stablecoin is a significant development for the industry. Having witnessed the rise and fall of numerous altcoins, I am always on the lookout for projects with potential to deliver tangible value.

Ripple Labs, known for creating XRP cryptocurrency, has developed a digital coin named RLUSD (Ripple Labs USD). This coin serves the purpose of providing a stable form of digital money suitable for both transactions and financial trades.

1 RLUSD has an equivalent value of one U.S. dollar. This fixed ratio is upheld by ensuring that each RLUSD token is backed by a corresponding asset, which can be U.S. dollar deposits or cash equivalents.

On December 10, 2024, RLUSD received approval from regulatory bodies. Specifically, the New York Department of Financial Services endorsed the newly developed stablecoin on both the XRP Ledger and Ethereum blockchain platforms.

In the following week, specifically on December 17th, RLUSD was formally unveiled, debuting on five digital currency exchanges: Uphold, MoonPay, Archax, Bitso, and CoinMENA. As time passes, it will become accessible on more prominent platforms such as Bullish, Bitstamp, and Mercado Bitcoin.

In 2025, the Regional School District (RLUSD) is set to join the Ripple Payment System. This network will employ stablecoins, a digital currency with minimal volatility, when serving enterprise clients seeking global payments. The integration is anticipated to bring about efficiency and cost-effectiveness in cross-border transactions, particularly for financial institutions.

Ripple clarified that RLUSD, which functions as digital cash, is not intended to replace XRP. Although both are connected to Ripple’s platform, they serve different purposes: while XRP facilitates global financial transactions, RLUSD acts as a digital currency.

Fun fact: Ripple introduced its digital currency XRP back in 2012. As of December 2024, it ranks fourth in terms of market capitalization, with Bitcoin (BTC), Ether (ETH) and Tether (USDt) leading the way.

How does RLUSD stablecoin work?

RLUSD works similarly to other major US dollar-pegged stablecoins by allowing people and institutions to deposit capital assets, like US dollars, in order to mint each new coin. The cryptocurrency can be transacted on the Ethereum and XRP Ledger blockchains.

There’s nothing inherently new about the technology and concept of Ripple’s new stablecoin. It is a direct competitor to established players like USDt and USD coin (USDC).

Having collateral as backup helps maintain a steady value for the cryptocurrency, preventing the extreme fluctuations experienced by certain other digital currencies. This stability makes it easier for businesses and traders to conduct transactions without worrying about erratic price swings.

The RLUSD can be utilized concurrently within the XRP Ledger and Ethereum blockchain, thereby enabling its usage as a trade pair on various digital exchange platforms or facilitating peer-to-peer transaction exchanges.

Here’s how RLUSD is different from USDt and USDC:

Benefits of RLUSD stablecoin

Ripple Lab’s USD-pegged token, RLUSD, is set to take a prominent position in the stablecoin market due to its robust features that ensure reliability, trustworthiness, and efficiency.

• Stable value: RLUSD is designed to maintain a consistent value of one US dollar, which is a feature in how RLUSD improves payments and transactions for crypto users.
• Regulatory approval: With RLUSD approval by NYDFS and Ripple Labs as developers, it is a trustworthy crypto project. This gives it immense credibility upon launch. 
• Institutional payment focus: The coin is purpose-built for institutional payments so that organizations can look forward to smooth, fast and cost-efficient global transactions
• Wide accessibility: Ripple is one of the biggest players in the blockchain world. They have plans to launch RLUSD on several exchanges, and it will likely soon be on every major crypto exchange. 
• Multi-blockchain support: The new stablecoin will run on two blockchains — XRP Ledger and Ethereum. There’s flexibility to use it across a wide ecosystem.
• Fully backed reserve: Funds are secure, with every RLUSD backed by a segregated cash or cash-equivalents reserve. This ensures you can always trade RLUSD for USD at a 1:1 ratio. 

Did you know? The SEC filed a lawsuit against Ripple Labs in December 2020. The regulator accused Ripple of selling XRP as an unregistered security. It took until July 2023 for Ripple to score a partial win, with the judge ruling that XRP sold on exchanges was not a security, though institutional sales violated securities law. The SEC appealed the decision in October 2024, with the crypto world still awaiting a final verdict.

Use cases of RLUSD stablecoin

The RLUSD beta test findings indicate that it’s both swift and dependable, with a budget-friendly nature. This versatile tool can prove beneficial in various financial scenarios, such as transactions, trading, decentralized finance (DeFi), and tokenization.

• RLUSD cross-border payments: Cross-border payments are perhaps the biggest use for stablecoins like RLUSD. They enable you to instantly send money anywhere in the world at minimal cost. Useful in the globally connected economy. 
• On/off-ramps: Cashing in and out of crypto can be a challenge. RLUSD provides a helpful on/off-ramp for traders entering and exiting exchanges without volatility risks. 
• Day-to-day payments: Ripple Lab has referred to the stablecoin as “digital cash,” which shows that they expect it to be used for smaller daily payments. Another handy use for fast and stable cryptocurrencies. 
• Asset tokenization: RLUSD enables you to tokenize real-world assets. Specifically, it allows institutions to provide collateralization for trading real-world tokenized assets like Treasurys, commodities and securities. 
• DeFi: With RLUSD’s integration into the Ethereum blockchain, it will provide a trustworthy stablecoin to integrate into DeFi protocols. You shouldn’t be surprised to see it used as a decentralized exchange (DEX) trading pair or collateral option on lending protocols.

Future outlook of RLUSD stablecoin

Plans for RLUSD (Ripple) are quite ambitious, with projections estimating a market capitalization surpassing the $2 trillion mark by the year 2028.

15 years after its debut, Bitcoin reached a staggering $2 trillion market cap on November 12, 2024 – a figure that was significantly more substantial than the $138 billion market cap of the world’s dominant stablecoin, USDt, at that time.

Pending regulatory approval, it appears that the planned launch by RLUSD towards the end of 2025 is looking optimistic. On its first day, we can expect a number of significant integrations to be in place.

Information about the launch of Ripple’s stablecoin has been gradually released over the past few months, starting when testing began on the XRP Ledger and Ethereum networks in August. The differences between RLUSD (Ripple’s USD-pegged stablecoin) and XRP are distinct, and it has been confirmed that RLUSD will not replace XRP but instead will enhance Ripple’s cross-border payment offerings.

Ripple has pledged to ensure regular, transparent audits for its stablecoin, involving both external auditors examining the collateral reserve and the publication of monthly financial statements. However, it remains unclear which party will conduct these audits.