Ripple poised for New York approval of stablecoin, set to enter regulated US crypto market

New York’s top crypto regulator is close to greenlighting a new stablecoin issued by cross-border payments company Ripple, FOX Business has learned.

People close to the matter say the New York Department of Financial Services has indicated to Ripple it will approve the product and the company is eyeing a possible launch date of Dec. 4. If approved, as expected, Ripple will be allowed to legally offer its stablecoin called RLUSD to the public, positioning it as a major player in New York’s regulated digital finance market and the wider stablecoin ecosystem.

Press officials for Ripple and the financial services department, known by its acronym, NYDFS, had no comment. 

Ripple’s core business centers around its decentralized global payments network, RippleNet, which uses blockchain technology to provide faster, cheaper, and more efficient cross-border payment solutions for banks and businesses. It's billed as an alternative to the global bank settlement system called SWIFT. Ripple's native token XRP serves as a bridge currency to settle those transactions, but the token is currently in regulatory limbo in the U.S. as the Securities and Exchange Commission continues to argue in court that it's an unregistered security. 

The case, now in the appeals phase in the Second Circuit, could be dropped by the crypto-friendly Trump Administration once it assumes power in January. In the meantime, with its future uncertain, XRP has been subject to volatile price swings.

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In 2020, XRP’s price fell more than 50% and its market cap lost $16 billion when the SEC sued Ripple for allegedly violating securities laws by selling XRP without first registering those sales with the commission. The price has largely remained under $1 in the nearly four years Ripple has been locked in legal combat with the SEC. 

XRP saw a massive jump in the weeks following Donald Trump's victory on Nov. 5 on hopes that he will fulfill his promise to ease crypto regulation and make the U.S. the ‘crypto capital of the planet.’

Today, XRP is trading at $1.70, making it the fifth largest cryptocurrency in the world with over a $99 billion market cap. 

By issuing a regulated stablecoin, Ripple will be able to offer a steady alternative to XRP for customers that want to use digital currencies without exposure to volatility and regulatory uncertainty. The move will also put Ripple in direct competition with other established U.S. stablecoin issuers like Circle, Paxos and Gemini.

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Stablecoins, digital currencies that are pegged to assets with stable valuations like the U.S. dollar, are used primarily as a store of value and a medium of exchange to facilitate faster, cheaper transactions in cross-border payments and remittances using blockchain technology. The current valuation of the stablecoin market is around $190 billion and that number is expected to grow under the incoming Trump administration, which is seen as being capable of passing stablecoin regulation at the federal level.

For now, regulation at the state level is the primary solution for companies looking to offer stablecoins. The NYDFS is known for its stringent approach to crypto regulation, ensuring that companies that want to offer digital assets meet a high regulatory bar, including fulfilling transparency, security and consumer protection requirements. Obtaining a limited purpose trust charter, which Paxos and Gemini have done, is one way for businesses in New York to offer specific services pertaining to digital assets without being subject to the more complex regulatory requirements of a traditional bank. Another is through a so-called BitLicense, which allows exchanges like Coinbase and Robinhood to facilitate trading and custody of crypto. 

In June, Ripple announced it had completed the acquisition of Standard Custody & Trust Company, a limited purpose trust company chartered by the NYDFS. Standard Custody will be the issuer of RLUSD upon regulatory approval. The acquisition helped accelerate Ripple’s stablecoin launch as Standard Custody was already licensed by the department to offer custodial services for digital assets upon acquisition.

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Ripple is set to collaborate with other payment providers such as Bitstamp, Moonpay and Uphold for the anticipated rollout of its stablecoin next week. 

"For another well-capitalized, highly regulated player to enter into the global stablecoin marketplace – especially as MiCA regulation in Europe is about to be implemented – is a win-win and MoonPay is proud to provide access to RLUSD for our partners and customers on day one of Ripple's launch," said Keith Grossman, president of Enterprise at MoonPay.