Ripple Set To Launch RLUSD on December 17: Everything You Need To Know About This Stablecoin

RLUSD stablecoin, pegged to the U.S. dollar, is set to launch on the XRP Ledger (XRPL) and Ethereum blockchains, backed 1:1 by cash reserves and short-term cash equivalents like U.S. Treasury bills. Approved by the New York Department of Financial Services, RLUSD will require XRP for transaction fees, which are burned during transfers, driving demand for the token.

Notably, Ripple announced that Ripple will begin rolling out RLUSD stablecoin to the public on Tuesday, December 17, providing a compliant and transparent digital asset backed by U.S. dollar reserves. Before the official launch of RLUSD stablecoin, interested investors can gain a thorogh understanding of this stablecoin through this article.

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Table of Contents

Latest News & Update on Ripple’s RLUSD

What is RLUSD?

How does RLUSD Stablecoin Work?

Relationship between RLUSD and XRP

What is the Significance of the Launch of RLUSD Stablecoin?

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Latest News & Update on Ripple’s RLUSD

Ripple is stirring up the crypto landscape once again by unveiling the highly anticipated launch of its enterprise-grade stablecoin, Ripple USD (RLUSD). Scheduled to go live on December 17, 2024, this stablecoin is designed to raise the bar for compliance, utility, and transparency.

Initially, the stablecoin will be available on exchanges including Uphold, Bitso, MoonPay, Archax, and CoinMENA, with additional listings expected on Bullish, Bitstamp, Mercado Bitcoin, Independent Reserve, Zero Hash, and more in the coming weeks.

The wait is over: RLUSD launches globally tomorrow!https://t.co/mYcyyX6Vre

— Ripple (@Ripple) December 16, 2024

The launch follows Ripple CEO Brad Garlinghouse’s announcement last week that RLUSD secured “final approval” from the New York Department of Financial Services, paving the way for rolling out the stablecoin for the public from its test phase. Fully backed by U.S. dollar deposits, U.S. government bonds, and cash equivalents, RLUSD aims to keep a steady price at $1.

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What is RLUSD?

RLUSD was launched by Ripple in June 2024. The token, dubbed RLUSD, is 100% backed by U.S. dollar deposits, U.S. government bonds, and cash equivalents, according to the company.

Stablecoins are critical infrastructure in the crypto economy and are increasingly being used for global payments, which is also one of Ripple’s business priorities. The RLUSD token was created to compete directly with Circle’s stablecoin, USDC. USDC is currently the second largest stablecoin with a market cap of $40 billion, USDC is only lags behind giant Tether (USDT), which has a market cap of more than $138 billion.

Monica Long, Ripple’s president, said in October that with RLUSD, Ripple is committed to leveraging the company’s established position in institutional payment services and serving as a key intermediary for real-world asset tokenization (RWA). Tokenization is a hot trend in the crypto space that puts traditional financial instruments on a blockchain chain for more efficient transactions.

How does RLUSD Stablecoin Work?

RLUSD’s support structure follows a proven model: RLUSD is backed 1:1 by US dollars, short-term US Treasury bonds, and cash equivalents. This structure not only ensures its stability, but also reflects Ripple’s serious approach to a market that have experienced catastrophic failures in the crypto ecosystem, such as the collapse of UST Terra in May 2022.

Unlike stablecoins backed by real assets, UST uses an algorithmic mechanism based on the burning and minting of its sister token, LUNA, to maintain the dollar peg. When the massive selloff shattered the stabilization mechanism, the system collapsed, and UST fell from $1 to almost nothing in a matter of days, wiping out more than $40 billion in market value.

The collapse of UST triggered a domino effect in the industry, leading to the collapse of giants such as Three Arrow Capital and Fortis, highlighting the exceptional importance of stablecoins backed by real assets and proper regulation.

With RLUSD, Ripple sends a clear signal to the market: the era of algorithmic experiments is over;  the future of stablecoins lies in transparency and real asset reserves.

Relationship between RLUSD and XRP

Once RLUSD is available, Ripple plans to use both RLUSD and XRP in its cross-border payments solution to serve its global customers, the company said in RLUSD’s beta testing announcement.

In June, Ripple president Monica Long also said that RLUSD was built to be “complementary and additive” to XRP.

According to some sources, Ripple  sees  RLUSD as “beneficial” for XRP as RLUSD and XRP will be paired with each other.

While XRP will help add liquidity to RLUSD with its significant availability on exchanges, the stablecoin’s price will also be stabilized by pairing to prevent depegging.

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What is the Significance of the Launch of RLUSD Stablecoin?

RLUSD is issued concurrently on both the XRP Ledger (XRPL) and the Ethereum blockchain as an ERC-20 token, enhancing its compatibility with a wide array of wallets, decentralized finance (DeFi) applications, and cryptocurrency exchanges. This dual issuance significantly broadens its usability across diverse platforms.

Ripple’s strategy revolves around creating a stablecoin that not only meets but also surpasses the expectations of financial institutions, regulators, and retail users. Each RLUSD token is fully collateralized, ensuring stability and liquidity, even in volatile market conditions.

Functionally, RLUSD is poised to play a pivotal role in numerous use cases. Institutions can utilize the stablecoin for instant cross-border payment settlement, improved liquidity management, and seamless integration with DeFi protocols. Furthermore, RLUSD is poised to become a cornerstone for collateralizing tokenized real-world assets, such as commodities and securities, on-chain. This innovative approach promises to propel the adoption of blockchain-based finance while maintaining stringent compliance measures.

Ripple’s Ripple Payments division also plans to incorporate RLUSD into its operations early next year, which could give it global relevance. Ripple Payments has already processed over $70 billion in transaction volume and established near-global coverage, spanning over 90 payout markets.This integration will expand RLUSD’s utility, enabling enterprises to settle international payments efficiently while enjoying blockchain technology’s cost-effectiveness and speed.

Overall, with the RLUSD stablecoin set to play a critical role in XRP’s ecosystem, the token is poised to remain a key player in the cryptocurrency market heading into 2025. However, the launch of RLUSD has sparked a blend of excitement and speculation. Ripple’s Chief Technology Officer, David Schwartz, cautioned against paying inflated prices for the stablecoin during its early days, as initial supply shortages could lead to temporary market imbalances. Schwartz reminded users that RLUSD is designed to maintain a stable value of $1 and is not intended as an investment. He also highlighted that arbitrage would quickly stabilize any price fluctuations.

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