Ripple aims to launch US dollar stablecoin to compete with USDT and USDC.

XRP issuer Ripple plans to launch a US dollar-backed stablecoin and hopes to compete with Circle and Tether for market share over the next five years.

Cointelegraph first spoke to David Schwartz, Ripple's chief technology officer, ahead of the announcement, who outlined plans for the stablecoin to be issued on the XRP Ledger and Ethereum blockchain.

“It is funny that the question you are asking has not been answered yet. What is the marker going to be, and what do we call it? Now they're going to call it Ripple stablecoin,” Schwartz said during a video call.

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Ripple has been toying with the idea of ​​launching a stablecoin for over a year, and Schwartz believes the current stablecoin ecosystem is not as diverse and robust as it could be. While Schwartz pegs the current value of the stablecoin market at $150 billion, there is room for another big player:

We think it will be over $2 trillion by 2028 and there are only two market leaders. We don't think there's a winner-take-all ecosystem, especially on the DeFi side.

Ripple's stablecoin is pegged to the US dollar at a 1:1 ratio, and the company plans to redeem the tokens in US dollar deposits, short-term US government Treasuries and “other cash equivalents”. Schwartz says Ripple wants to emulate Circle's focus on compliance and possibly compete with USD Coin (USDC) issuers.

“Our angle is going to be very ‘compliance-first.'

“We are looking to capture market share. “We're not looking to penalize two more decimal points by risking other people's money,” Schwartz added when asked about Ripple's plans to back its stablecoin with dollar deposits, US Treasuries and cash equivalents.

The assets of the reserve are prepared to be audited by a third-party accounting firm, and Ripple publishes monthly confirmations. Schwartz drew comparisons to the early days of Tether's (USDT) stablecoin, where critics often raised the alarm over the issuer's ability to steal funds and the credibility of its backup credentials.

“When Tether first started, the biggest concern was whether these people were going to run away with all the money because they encouraged them to do that. Then, after a while, he said, ‘You're like, wait a minute, these guys have long careers,'” Schwartz said.

Ripple's chief technology officer added that the reality of launching a new stablecoin that attracts hundreds of millions, billions or tens of billions of dollars leads to these kinds of concerns. The company relies on its credibility, track record and strong balance sheet to enter the stable coin market.

“I think we have a credible claim to the above discussion. If at the end of two years we're number three, but the market is 10 times what it is today, that's still pretty good,” Schwartz said.

Cointelegraph asked why Ripple is interested in a stablecoin offering when XRP (XRP) is the real-time comprehensive settlement system, currency exchange and remittance network that primarily caters to financial institutions.

Schwartz said Ripplenet will serve non-bank payment companies using XRP for transparent payments. However, there are some markets where these companies cannot meet liquidity using XRP.

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“Finding more ways to give customers a better experience means you have more customers. If we only do things with XRP, we have to say no to customers where XRP is not available,” Schwartz explained.

Ripple's stablecoin introduction ecosystem is designed to complement the recently launched automated market maker. Schwartz says a stable coin offers cash flow and captures volatility and arbitrage opportunities between multiple assets.

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