The cryptocurrency space is always evolving, with new tokens and projects emerging regularly.  One of the most anticipated developments is the launch of $RLUSD, a stablecoin from Ripple, the company behind the popular cryptocurrency, $XRP. 

What is Ripple?

Ripple Labs is a U.S.-based blockchain company founded in 2012. It is most recognized for RippleNet, a global payments network, and its cryptocurrency, XRP, which provides liquidity for international transactions. Ripple also operates the XRP Ledger (XRPL), a decentralized blockchain that enables fast and secure transactions with XRP as its native currency. Unlike many blockchain firms, Ripple focuses on improving traditional financial systems, collaborating with banks to make cross-border payments faster and cheaper. 

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What is RLUSD?

RLUSD is Ripple’s new upcoming stablecoin, designed to be backed 1:1 with the U.S. dollar. Stablecoins like RLUSD are crucial in crypto as they offer a bridge between traditional finance and cryptocurrency, making transactions easier without the volatility of other digital assets.

Ripple’s RLUSD will operate on the XRP Ledger and Ethereum blockchain, making it accessible to users across different ecosystems. They intend to make RLUSD useful for various decentralized finance (DeFi) applications, including payments, lending, and other financial services. According to Ripple's Chief Technology Officer, David Schwartz, RLUSD will primarily target institutional investors initially, with access for retail consumers through intermediaries at a later stage. 

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RLUSD Recent Updates

Earlier in 2024, Ripple issued 185 RLUSD tokens during a private beta phase to test the stability and functionality of the coin. These tokens were recently burned last August 2024 by sending them back to the RLUSD issuer account, bringing supply back to 0.  This clarified false claims, at the time, that RLUSD was already live. More recently, however, Ripple started another testing phase by minting more tokens again, with 485 RLUSD tokens entering supply. Moreover, Ripple also proceeded to burn 100 RLUSD tokens. 

The process of burning and minting tokens is especially important for fiat-backed stablecoins. When users buy stablecoins, new tokens are minted, and an equivalent amount of fiat is deposited into reserves. Conversely, when users redeem stablecoins for fiat, those tokens are burned, ensuring that the amount of stablecoins in circulation corresponds to the fiat reserves. 

Continuously burning and minting tokens shows Ripple’s dedication to fine-tuning their token, ensuring that it will work as intended upon launch. As per recent reports, RLUSD’s official launch could be in a few weeks. 

Ripple’s Legal Battle with the SEC

Ripple’s preparations for RLUSD also come as the company remains caught in a legal battle with the U.S. Securities and Exchange Commission (SEC). Last December 2020, the SEC filed a lawsuit against Ripple, alleging that the sale of XRP tokens constituted an unregistered securities offering. Ripple has contested this, arguing that XRP is a digital currency, not a security. Though Ripple recently experienced a significant win with the court ruling last August 7, 2024 that XRP is not security, the SEC can still appeal this decision.  

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Why this matters

Aside from inherently offering more stablecoin options, Ripple’s goal to launch RLUSD is also a push towards innovation. With several recent attacks on the crypto space from regulators, it has become increasingly difficult for developers to build without fear of litigation. Despite having an ongoing case with the SEC, Ripple continuing to develop RLUSD demonstrates its commitment to advancing Web3 even amid regulatory challenges. 

However, it’s important to note that many crypto projects are not as large as Ripple, and can’t afford to continue developing while facing lawsuits. As blockchain continues to gain more adoption, what Ripple and the whole Web3 space needs perhaps would be more regulatory clarity to go hand-in-hand with innovation.