Ripple CTO explains how the XRP ledger can help banks and other institutions create their own stablecoins using a new tool.
In a recent article on the Ripple website, David Schwartz, the company’s CTO, shared how a new feature in the XRP ledger could help institutions issue stablecoin backed by deposits.
Offering stablecoin on XRP Ledger
David Schwartz reminded the community of the OCC’s decision last summer to allow banks to hold cryptocurrencies for their customers and serve crypto businesses.
Another step towards crypto regulation and legalization recently made by the OCC has allowed banks to run nodes for public blockchains that support stablecoins and use USD-based stablecoins for payments.
Ripple CTO says financial institutions can use the XRP ledger to issue their own stablecoins, and the new platform called “Issued Currencies” can help them do so.
New tool for launching digital assets in XRPL
“Issued Currencies” is a functionality that can be used to spread and manage any digital assets as well as the stablecoins mentioned above.
To do this, an issuer needs to open an account, select the configuration options it needs to generate a specific stablecoin.
Ripple CTO promises that stablecoins can be created easily and securely, reducing business risks.
To create a stablecoin, a bank must connect to an on-premises XRPL node or use the bank’s cloud infrastructure. The issuer needs to set up a wallet, select the desired stablecoin settings and send a configuration transaction from the manager account to the XRP ledger.
XRP can support direct exchange of CBDCs
Earlier, Ripple stated that its native token XRP can be used as a bridge currency for direct exchange of various CBDCs (central bank digital currencies).
Ripple believes that in the future, CBDCs will be widely used to resolve cross-border payments between banks, and banks will need a neutral asset to bridge transactions where different stablecoins will be used.
Ripple stated that XRP meets multiple requirements for such an asset.