- The firm temporarily researched fiat currency constant cryptocurrencies. While Ripple faces a lawsuit from the US Securities and Exchange Commission and mass exclusions from various exchanges, some wonder if a complementary business plan is viable.
The firm temporarily researched fiat currency constant cryptocurrencies. While Ripple faces a lawsuit from the US Securities and Exchange Commission and mass exclusions from various exchanges, some wonder if a complementary business plan is viable.
One option is shifting the firm’s focus to stablecoins and central bank digital currencies (CBDCs) with the review of XRP.
Is Ripple interested in CBDCs?
Ripple has expressed interest in CBDCs in the past. In August 2020, Ripple’s Senior Director of Global Operations Emi Yoshikawa stated that XRP does not compete with “stablecoins” or CBDCs. He added that XRP is complementary to stablecoins and can aid settlement.
Later in November, Ripple CEO Brad Garlinghouse acknowledged that a number of central banks were examining XRP Ledger “as an open source technology for issuing stablecoins.” He stated that although Ripple is not directly involved in these activities, the firm is trying to “help” these banks.
Regarding both of these statements, Ripple reiterated this January that it aims to provide a neutral bridge presence for CBDCs, such as China’s upcoming digital yuan.
However, these plans rely heavily on XRP as a bridge currency, which means that this strategy is less likely to displace XRP itself.
Banks can already issue XRPL Stablecoins
As announced by Ripple CTO David Schwartz earlier this month, it is already possible for banks to issue their own private stablecoins on XRP Ledger. According to Schwartz, banks only need to connect to one node and invest their own financial support to do this.
Schwartz acknowledges that the Currency Supervisory Office (OCC) has given US banks permission to contribute to stablecoin networks. This means Ripple is in a better position than ever to encourage banks to issue new tokens in XRP Ledger.
Schwartz has previously suggested that an XRP-backed stablecoin is possible. The proposed system will allow anyone to deposit XRP and create their own stablecoin.
However, once again, Ripple has little influence among third parties who decide to issue their own stablecoins.
Tether alternative unlikely
It is clear that Ripple is not considering releasing its own stablecoin to the general circulation. It is extremely unlikely that the firm will offer a coin comparable to Tether (USDT), DAI or USDC.
It is much more reasonable for a private bank or central bank to build a stablecoin on XRP Ledger. This is a similar decision to Ukraine’s plans to build a stablecoin on Stellar. However, if the firm does not maintain the relationship, this type of development will not necessarily attract lasting interest for Ripple.
In light of these facts, Ripple will likely continue to focus on the deal in general rather than stablecoins in particular, even when the legal status of XRP is reviewed in court.