Ripple Is Headed for Stablecoin Approval: A Major Win for Crypto, Despite Legal Hurdles
In a groundbreaking development for the cryptocurrency industry, Ripple Labs is reportedly on the verge of receiving approval from the New York Department of Financial Services (NYDFS) to launch its new stablecoin, RLUSD.
According to sources cited by Fox Business, this approval could arrive as early as December 4, positioning Ripple to make a significant impact on the regulated digital finance market in New York and the broader stablecoin ecosystem.
A Strategic Shift Amid Regulatory Challenges
Ripple, known for its blockchain-based payment network RippleNet, has long been a prominent player in facilitating efficient and cost-effective cross-border transactions. However, its native token, XRP, has been entangled in legal disputes with the U.S. Securities and Exchange Commission (SEC) since December 2020.
The SEC alleges that XRP is an unregistered security, a claim that has led to substantial market volatility for the token. XRP’s value plummeted by over 50% following the lawsuit, though it has recently surged to $1.77, securing its position as the fifth-largest cryptocurrency with a market cap of $101 billion.
The legal battle has now progressed to the appeals phase. Notably, with the impending change in U.S. administration and the anticipated departure of SEC Chairman Gary Gensler on January 20, 2025, there’s growing optimism within the crypto community. The incoming Trump administration’s pro-crypto stance fuels hopes that regulatory pressures on XRP might ease, potentially leading to a more favorable environment for Ripple’s operations.
Introducing RLUSD: Ripple’s Foray into Stablecoins
The expected approval of RLUSD marks Ripple’s strategic entry into the stablecoin market—a sector currently valued at over $196 billion. Stablecoins, like RLUSD, are digital currencies pegged to stable assets such as the U.S. dollar, minimizing the price volatility commonly associated with cryptocurrencies.
By offering RLUSD, Ripple aims to provide a stable alternative to XRP, catering to customers seeking reliability in digital transactions without regulatory uncertainties.
This move positions Ripple in direct competition with established stablecoin issuers like Circle, Paxos, and Gemini. The launch of RLUSD could significantly expand Ripple’s influence in the digital finance space, leveraging its existing infrastructure to attract a wider audience.
Implications of SEC Leadership Changes
Gary Gensler’s upcoming resignation as SEC Chair adds another layer of significance to Ripple’s stablecoin approval. Gensler’s tenure was marked by rigorous scrutiny of the crypto industry, including the high-profile lawsuit against Ripple. His departure aligns with speculations that the SEC, under new leadership, might adopt a more crypto-friendly approach. Industry experts like Chris Giancarlo, former CFTC Chairman, suggest that the SEC may reconsider ongoing lawsuits that have faced setbacks, potentially dropping the case against Ripple.
In addition, the anticipation of a Trump administration that advocates for cryptocurrency innovation bolsters the belief that regulatory frameworks will evolve to support rather than hinder the crypto industry. This could pave the way for federal stablecoin regulations, fostering growth and stability in the market.
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