Can XRP Serve As RLUSD Reserve? Here’s an Expert Opinion

After a lengthy regulatory process, the New York State Department of Financial Services (NYDFS) has officially approved Ripple’s RLUSD stablecoin. This marks a significant milestone for Ripple and its community, which has been anticipating the launch of the USD-backed digital asset for some time.

Vincent Van Code (@vincent_vancode), a prominent figure in the cryptocurrency space, recently weighed in on details surrounding the stablecoin, noting that “RLUSD requires cash or cash equivalent backing, like Treasury bills, bonds, or cash, as per NYDFS approval of the token.”

This regulatory mandate ensures that RLUSD maintains its peg to the U.S. dollar, reinforcing trust and transparency in its operations.

Ripple promised this would be the case when the stablecoin was announced, and the NYDFS approval adds credibility to Ripple’s promises.

Digital Assets and RLUSD Collateralization

Digital assets, including XRP and Bitcoin, are currently not acceptable to back RLUSD under NYDFS guidelines. Van Code noted, “XRP or any digital asset (including BTC) are currently NOT approved as cash equivalent to back RLUSD.”

There were rumors that Ripple might custody its escrowed XRP as a reserve for RLUSD. This was quickly debunked by experts, pointing out that the regulators would not accept that.

However, Van Code also speculated on the possibility of such assets being considered in the future, provided they meet stringent requirements. He also noted that the digital assets backing the stablecoins would need to be over-collateralized in case their prices drop.

Such a scenario would allow digital assets to play a role in RLUSD’s collateral structure, though this remains purely speculative. Any move in this direction would require extensive regulatory approval and mechanisms to mitigate the volatility of digital assets.

RLUSD Launch Timeline

Addressing questions about potential hurdles delaying RLUSD’s launch, Van Code clarified that the asset has fulfilled all regulatory requirements. “NYDFS approved it. Now they are turning it all on. It takes a fair bit of time,” he stated.

The implementation process involves creating the necessary infrastructure and demand for the stablecoin, ensuring a seamless rollout.

Ripple’s stablecoin has already generated considerable excitement within the community, with many trustlines being created in anticipation of its debut.

While the community remains optimistic about RLUSD’s potential to drive adoption and utility, immediate price impacts on XRP, Ripple’s native token, Van Code expects its impact on XRP to be modest. He emphasized that “the impact on XRP price won’t be immediate.”

He pointed out that creating demand and utility takes time. He also mentioned that any price trend at this time is driven more by enthusiasm than by sustained utility-driven demand.

Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.

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