(Kitco News) – Stablecoins continue to be the most successful application of real-world asset (RWA) tokenization as Ripple, the firm responsible for the creation and management of XRP, announced plans to launch a stablecoin that is pegged 1:1 with the U.S. dollar.
According to a release from Ripple, the stablecoin “will be 100% backed by US dollar deposits, short-term US government treasuries, and other cash equivalents. These reserve assets will be audited by a third-party accounting firm, and Ripple will publish monthly attestations.”
The stablecoin market is currently worth around $150 billion – led by Tether (USDT), which has a market cap of nearly $106.2 billion – and is forecasted to exceed $2.8 trillion by 2028.
“There’s clear demand for stablecoins that deliver trust, stability, and utility,” Ripple said. “To meet this growing demand, Ripple will issue a stablecoin, leveraging its decade-plus of experience building real-world financial solutions for institutions around the world.”
“This is a natural step for Ripple to continue bridging the gap between traditional finance and crypto,” said Brad Garlinghouse, CEO of Ripple. “Institutions entering this space are finding success by partnering with compliant, crypto-native players and Ripple's track record and resiliency speaks for itself, as we launch new products and acquire companies through multiple market cycles. This move is also monumental for the XRP Ledger community, driving more use cases, liquidity and opportunities for developers and users.”
Once the stablecoin launches, it will initially be available on the XRP Ledger (XRPL) and Ethereum (ETH) blockchains, and Ripple plans to expand to additional blockchains and decentralized finance (DeFi) protocols and apps over time.
“Issuing our stablecoin on the XRP Ledger and Ethereum will serve as a pivotal entry point to unlock new opportunities for institutional and DeFi use cases across multiple ecosystems,” said Monica Long, President of Ripple. “The XRP Ledger’s native capabilities, including a decentralized exchange and automated market maker, were built to utilize XRP as the bridge asset. Bringing a trusted stablecoin onto XRPL will drive more adoption and development, contributing to a vibrant ecosystem.”
Ripple said their stablecoin “is expected to be available later this year, subject to applicable regulatory approval.”
PayPal stablecoin for cross-border transactions
In other stablecoin developments, PayPal announced that Xoom, the company’s cross-border money transfer service, will now allow U.S. users to fund money transfers to friends and family abroad using USD converted from PayPal’s stablecoin, PayPal USD (PYUSD).
“Rolling out to customers in the U.S. starting today, the new funding option will allow U.S. Xoom users to easily convert the PYUSD in their linked PayPal Cryptocurrency Hub to USD and use that as a funding source to send money to recipients in approximately 160 countries globally with no Xoom transaction fees,” the announcement said.
The move comes as consumers are looking for cost-effective options for cross-border payments as the global average cost of sending $200 is more than 6%, according to the World Bank's Q3 2023 report.
"When we decided to bring PayPal USD to market, we had two objectives we wanted to achieve: create something that had a stable value to maximize user confidence and ensure it had utility for commerce and payments," said Jose Fernandez da Ponte, Senior Vice President of the Blockchain, Cryptocurrency, and Digital Currency Group at PayPal. "Enabling U.S. users of Xoom the option to fund cross-border money transfers using PYUSD builds on our goal of driving mainstream adoption of cryptocurrencies while also offering an easy way to securely send money to friends and family at a lower cost."
The option to fund transfers with PYUSD is now available on Xoom.com, PayPal.com, and the PayPal app. When this option is selected, Xoom will convert PYUSD to USD currency with no crypto sale fee, and recipients will receive funds in the fiat currency selected by the sender. “Transactions that are not completed in USD are subject to a transaction exchange rate, which includes a currency conversion spread,” PayPal said.
