Ripple Achieves NYDFS Approval for RLUSD Stablecoin
Ripple, the digital payments company behind the XRP cryptocurrency, has received final approval for RLUSD from the New York Department of Financial Services (NYDFS). This milestone was confirmed by CEO Brad Garlinghouse on X, marking a significant development in regulated stablecoins.
“This just in…we have final approval from NYDFS for $RLUSD!” Garlinghouse announced.
RLUSD as a Competitive Stablecoin
RLUSD is backed 1:1 by the US dollar and aims to compete with Circle's USDC, which holds a market cap of $40 billion, and Tether's USDT, valued over $138 billion.
Its backing consists of US dollar deposits, short-term US Treasury bonds, and cash equivalents, ensuring stability and addressing past failures seen in the crypto ecosystem, such as the collapse of Terra’s UST in May 2022.
UST relied on an algorithmic mechanism involving its sister token LUNA to maintain dollar parity. This system failed during massive sell-offs, leading to a drop from $1 to nearly zero and resulting in over $40 billion in losses.
The fallout from UST’s collapse affected major players like Three Arrows Capital and FTX, underscoring the necessity for stablecoins backed by real assets and regulatory oversight.
Implementation and Market Implications
With RLUSD, Ripple emphasizes that the future of stablecoins will focus on transparency and real asset reserves rather than algorithmic models.
The company has conducted tests on XRP Ledger and Ethereum, preparing RLUSD for launch on key partner platforms. This multichain approach enhances Ripple's cross-border payment capabilities, leveraging the connection between RLUSD and XRP.
Ripple's entry into the regulated stablecoin market strengthens its role in the crypto ecosystem and indicates a shift towards greater institutionalization within the sector.