Rumor Says Ripple Will Custody Its Entire XRP Escrow For RLUSD Initial Reserve

The New York Department of Financial Services appears to be approaching the final stages of review for the RLUSD stablecoin, signaling a potentially significant milestone for Ripple.

This regulatory progression has intensified market speculation about the stablecoin’s potential mechanisms and strategic positioning within the cryptocurrency landscape.

Market analysts and community commentators have proposed intriguing scenarios regarding the potential backing and deployment of RLUSD. Some prominent voices in the XRP community have suggested a novel approach involving Ripple’s substantial XRP escrow holdings as a financial instrument for the stablecoin’s initial reserve strategy.

According to market commentator Del Crypto, one speculative scenario involves Ripple using its XRP escrow to establish initial reserves.

Vincent Van Code, another prominent community figure, weighed in on this hypothetical strategy, noting that it could enable Ripple to mint RLUSD and distribute it to On-Demand Liquidity (ODL) partners while generating substantial working capital for the company.

Potential Ecosystem Implications

The proposed strategy could potentially generate significant advantages for the XRP Ledger ecosystem. Theoretically, the approach might introduce enhanced liquidity, manage XRP’s circulating supply, and create additional economic dynamics within the cryptocurrency market.

The speculation has coincided with a notable price surge for XRP, which recently hit a peak of $2.8487, and is trading at $2.71, with a 40.05% increase over the past 24 hours. This price movement has pushed XRP to heights not seen since 2018, and positioned it as the third-largest cryptocurrency, surpassing competitors like Solana, BNB, and USDT.

Van Code believes this strategy could help XRP climb, potentially reaching $1,000. Other experts have recently expressed confidence in this target, but there are some crucial considerations to this rumored strategy.

Regulatory Considerations for this Approach

Ripple initially promised a different approach to how RLUSD would be backed. Regulators may not like this approach proposed by Del Crypto.

The company’s announcement explicitly stated that RLUSD would be backed exclusively by USD deposits, short-term U.S. government treasuries, and cash equivalents. This official stance contrasts with the more speculative community discussions.

Prominent XRP community member WrathofKahneman urged caution regarding unverified rumors, emphasizing the potential regulatory challenges of using XRP or any cryptocurrency as collateral for RLUSD.

One community member noted that regulatory bodies traditionally prefer established, low-volatility assets for stablecoin reserves. This could potentially complicate the rumored backing strategies.

Instead, he proposed a unique approach, suggesting potential frameworks, where traditional cash-backed tokenization could coexist with cryptocurrency-adjacent reserve mechanisms.

Considering that regulatory approval is the only roadblock left for RLUSD’s launch, Ripple must navigate these complex backing issues to get the stablecoin through regulators.

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.

---

Follow us on Twitter, Facebook, Telegram, and Google News