Ripple poised for New York approval of stablecoin, set to enter regulated US crypto market

New York’s premier crypto regulator is close to greenlighting a new stablecoin issued by cross-border payments company Ripple, with an announcement expected in the coming days, FOX Business has learned.

The approval by the New York Department of Financial Services means that Ripple will be allowed to legally offer its stablecoin, RLUSD, through a so-called limited purpose trust charter, positioning it as a major player in New York’s regulated digital finance market and the wider stablecoin ecosystem.

Spokespeople for Ripple and the NYDFS had no comment.

Ripple’s business model revolves around leveraging blockchain technology through its global payment network RippleNet to provide faster, cheaper and more efficient cross-border payment solutions for banks and businesses as an alternative to global bank settlement system SWIFT. Its native token XRP serves as a bridge currency to settle those transactions, but the token is currently unregulated in the U.S. and subject to volatile price swings.

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In 2020, XRP’s price fell more than 50% and its market cap lost $16 billion when the Securities and Exchange Commission sued Ripple for allegedly violating securities laws by selling XRP without first registering those sales with the commission. The price has largely remained under $1 in the nearly four years Ripple has been locked in legal combat with the SEC. However, XRP saw a massive jump in the weeks following the victory of crypto-friendly President-elect Donald Trump on hopes that he will fulfill his promise to ease crypto regulation and make the U.S. the "crypto capital of the planet."

Today, XRP is trading at $1.70, making it the fifth largest cryptocurrency in the world by market cap.

By issuing a regulated stablecoin, Ripple will be able to offer a steady alternative to XRP for those that may want to use digital currencies without exposure to volatility and regulatory uncertainty. The move will also put Ripple in direct competition with other established U.S. stablecoin issuers like Circle, Paxos and Gemini.

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Stablecoins, digital currencies that are pegged to assets with stable valuations like the U.S. dollar, are used primarily as a store of value and a medium of exchange to facilitate faster, cheaper transactions in cross-border payments and remittances using the underlying blockchain technology. The current valuation of the stablecoin market is around $190 billion and that number is expected to grow under the incoming pro-crypto Trump administration, which is seen as being capable of passing stablecoin regulation at the federal level.

For now, regulation at the state level is the primary solution for companies wanting to offer stablecoins. The NYDFS is known for its stringent approach to crypto regulation, ensuring that companies that want to offer digital assets meet a high regulatory bar, including complying with anti-money laundering and consumer protection regulations. Obtaining a limited purpose trust charter, as Ripple will, is one way for businesses to offer specific services pertaining to digital assets without being subject to all the regulations of a traditional bank. Stablecoin issuers Paxos and Gemini are also registered with the NYDFS and can offer New York residents and businesses access to PAX and GUSD stablecoins through their trust charters.

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Ripple will collaborate with other payment providers such as Moonpay for the anticipated rollout of its stablecoin in the coming days.

"For another well-capitalized, highly regulated player to enter into the global stablecoin marketplace – especially as MiCA regulation in Europe is about to be implemented – is a win-win and MoonPay is proud to provide access to RLUSD for our partners and customers on day one of Ripple's launch," said Keith Grossman, president of Enterprise at MoonPay.