Jeremy Allairethe CEO of the stablecoin issuer Circlewelcomed Ripple entry into the market.
Earlier today, crypto company Ripple revealed plans to launch a stablecoin that would be 100% backed by US dollar deposits, government bonds and cash equivalents.
In response, Allaire said it was “encouraging to see more companies taking a compliance-first approach to generating on-chain dollars.”
Circle is the issuer of USD Coin (USDC), the second largest stablecoin by market capitalization. The company's asset is experiencing a renaissance, becoming the best performing coin among major stablecoins during the first quarter of the year.
Meanwhile, Tether USDT remains the dominant stablecoin, controlling around 70% of the market, with its capitalization of $104 billion.
Why Ripple wants to issue a stablecoin
Ripple announced it would launch a dollar-pegged stablecoin on XRP Ledger and Ethereum Later this year.
According to the company, the sector is expected to exceed $2.8 trillion by 2028, signifying clear demand for such assets. It said:
“Stablecoins serve as a critical entry point to DeFi and introduce a reliable, enterprise-grade stablecoin into the XRPLedger will generate more use cases, liquidity and opportunities for developers and users.
The crypto company added that its yet-to-be-named stablecoin would be key to expanding its reach into institutional and DeFi areas, diversifying use cases, and improving payments infrastructure.
Brad Garlinghouse, CEO of Ripple, described the move as a natural step for the company, given its track record in the crypto industry. He added that the move would also help boost XRPL use cases, liquidity, and other opportunities for developers and users.
Likewise, Monica Long, President of Ripple, remarked:
“The issuance of our stablecoin on XRP Ledger and Ethereum will serve as a critical entry point to unlock new opportunities for institutional and DeFi use cases across multiple ecosystems.”
Following the news, XRP resisted its current downtrend to jump more than 4%. The price of the digital asset rose to $0.61 before falling back to $0.5978 at press time, according to CryptoSlate data.