Since Ripple Can Freeze Your RLUSD, It’s Crucial to Know Why XRP Remains Vital

Anders (@X__Anderson), a prominent digital asset researcher on X, recently drew attention to the terms governing RLUSD usage, highlighting its limitations compared to cryptocurrencies like XRP.

His post on X began an intriguing discussion about the different role RLUSD plays, and why cryptocurrencies like XRP remain indispensable.

Limitations On RLUSD

RLUSD has comprehensive terms of service. It outlines stringent restrictions on its use. According to the agreement, RLUSD cannot be used for transactions involving regulated products, such as marijuana, tobacco, or firearms, nor for adult content, pseudo-pharmaceuticals, or any high-risk businesses.

Ripple broadly defines high-risk businesses, encompassing activities like gambling (e.g., poker or horse racing) unless explicitly licensed by the relevant jurisdictions. Ripple also retains the right to suspend or terminate a user’s RLUSD account if these terms are violated, which could lead to a freeze of funds.

As Anders noted, this means users engaging in prohibited activities, such as buying drug paraphernalia or participating in online poker, risk having their RLUSD accounts frozen. While these restrictions align with regulatory compliance requirements and the policies of financial institutions, they illustrate a key limitation of stablecoins: their centralized oversight.

RLUSD is notable, as it was approved by the New York State Department of Financial Services (NYDFS). However, Ripple’s ability to freeze accounts and restrict usage contrasts sharply with the decentralized nature of cryptocurrencies like XRP, which operate without centralized control.

Decentralization Shows the Importance of Cryptocurrencies

This regulatory environment is one of the reasons Anders argues stablecoins are not a replacement for cryptocurrencies. He clarified that his critique is aimed at those who believe Ripple and other entities will exclusively rely on stablecoins like RLUSD for transactions, relegating XRP to a mere “gas token.”

Anders’ post shows that stablecoins, while useful for maintaining price stability, lack the censorship resistance and permissionless attributes of cryptocurrencies. “I’m trying to show why XRP and crypto are needed,” he explained.

The discussion also highlights the distinct purposes of stablecoins and cryptocurrencies. Stablecoins such as RLUSD are designed for price stability, making them ideal for specific use cases.

However, their reliance on centralized issuers and adherence to regulatory frameworks limit their utility in scenarios requiring financial sovereignty and unregulated transactions.

In contrast, cryptocurrencies like XRP offer a decentralized alternative, allowing users to transact without the risk of account freezes or usage restrictions. This autonomy is critical in contexts where financial freedom and resistance to censorship are paramount.

In a world where free speech is constantly threatened and unnecessarily stringent crypto regulation is becoming the norm, these decentralized assets can play a crucial role in giving autonomy and power to the people.

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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