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Ripple enters the stablecoin market and launches a new digital currency pegged to the dollar

She declared Ripple, a company specializing in blockchain technologies, announced its entry into the stable currency market by launching its new digital currency pegged to the US dollar. The size of this market currently stands at $150 billion.

The new Ripple currency will compete with the stablecoin giants on the market, led by the issuing company “Tether”. For USDT currency The stablecoin – currently the largest currency by market capitalization – and the issuing company Circle For USDC currency.

Ripple plans to launch its stablecoin in the United States initially. However, he does not rule out the possibility of offering stable regional currencies in other markets such as Europe and Asia in the future.

This trend comes in light of the fierce competition between large digital currency companies wishing to break into the stablecoin sector. Earlier, PayPal has been launched Its own dollar-backed stablecoin, PayPal USD, in collaboration with its partner Paxos.

However, Ripple CEO Brad Garlinghouse stressed that competition in this market will not deter his company from launching its new product. He declared, in interview “The landscape of this market will be different in the future, especially in terms of size,” said a former CNBC reporter.

Why is Ripple launching a stablecoin?

Garlinghouse explained that his company's decision to launch a stablecoin was a response to the "decoupling" of cryptocurrencies. USDT And USDC than the US dollar in the past. This has raised doubts about the authenticity of these two coins.

In 2022 I lost Currency USDT Its anchor to the dollar for a temporary period. Due to the financial instability caused by the collapse of the TerraUSD stablecoin.

as USDC value fell Without the dollar in 2023 after revealing it was exposed to financial risks due to the collapse of Silicon Valley Bank.

learn more: JP Morgan: USDT dominance threatens digital currency market

Some observers are known to express doubts about the sources of Tether's reserves and the size of its capital and its ability to cover withdrawals in the event of investor panic. For its part, Tether has repeatedly emphasized that its currency is entirely backed by high-quality reserves. It also always successfully covers withdrawals, even in difficult circumstances.

It should be noted that “Tether” is the company issuing the largest stable currency in the world. Its market value stands at $106.3 billion, according to data from the CoinGecko platform.

The company will not abandon its XRP currency

The new stablecoin Ripple will be used as a “bridge” currency to settle rapid financial transactions between banks and other institutions via its “Liquidity on Demand” product. XRP coin Basically for him.

But Ripple has already encountered difficulties in promoting To use XRP currency In banks, payment and money transfer companies.

For example, the Santander bank abandoned its intention to use... XRP coin In cross-border payments. This is due to its poor coverage of major markets around the world.

MoneyGram also ended its partnership with Ripple to use... XRP For financial transfers due to high costs resulting from the need to collaborate with digital currency trading platforms in different markets.

Garlinghouse stresses that his company has not abandoned its use XRP coin As a currency of payment. Stablecoins will serve as a complementary product in the Ripple financial system. “We have been using stablecoins for payments for years,” he added. “This is not new to us.”

He also noted that other blockchain systems – known as layer 1 protocols which have their own digital currencies – have launched their own stablecoins. There has also been growth in total trading volume and liquidity abundance.

At the end of his speech, Garlinghouse said: “We believe that the availability of liquidity reserves on the XRP ledger will contribute to the strengthening and growth of the market. XRP"

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