Ripple’s policy brief lately has addressed how to balance stablecoins regulation while preserving their transformative potential. With stablecoins now commanding over $200 billion in market value, the entity warns against overly rigid local regulations that could fragment the market and slow down international payments.
Ripple’s message to regulators is pragmatic – while consumer safeguards are essential, maintaining the global interoperability of stablecoins should remain a priority. The company has put forward several suggestions to help policymakers strike this delicate balance, aiming to preserve the technology’s core benefits while building a more secure ecosystem.
What you'll learn 👉
How Ripple Views Local Issuance Rules and Stablecoin Adoption
According to Ripple, local issuance requirements, such as those outlined in the MiCA regulation, could create unnecessary barriers to stablecoin adoption. These regulations mandate that stablecoins be issued by locally regulated entities with backing assets held in local institutions.
While domestic oversight aims to protect users, it could inadvertently chip away at what makes blockchain special – its ability to move value seamlessly across borders. The company points out that forcing stablecoins to follow local rules might create a fragmented system where the same token has different values in different places. This could make things more complicated and expensive for everyone involved.
Furthermore, determining the geographic location of users transacting in stablecoins, on decentralized exchanges, poses a challenge. Ripple urges regulators to consider a more holistic approach that ensures liquidity and accessibility without restricting cross-border functionality.
The Case for Globally Fungible Stablecoins
Ripple advocates for an internationally consistent regulatory framework that prioritizes stablecoin fungibility. The report categorizes stablecoin issuance into three key elements: technological, legal, and backing.
- Technological: Regardless of issuer location, stablecoins should remain interoperable across networks.
- Legal: Local entities may be required to honor redemption claims, ensuring stability and consumer protection.
- Backing: A proportionate reserve structure should support redemption requests without fragmenting liquidity across jurisdictions.
The company also highlighted Singapore’s regulatory approach, which classifies overseas stablecoins as digital payment tokens (DPTs) rather than subjecting them to full stablecoin regulations. This model, Ripple suggests, provides a balanced approach to oversight while preserving global access.
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Potential Impact on XRP’s Price
XRP price has been swinging around $3.00 to $3.13 lately. At publication, XRP trades around $3.07, according to CoinGecko. This value indicates a 1.12% and 3.43% dip over the last day and week.
With rumors of an ETF approval increasing, market observers are bullish about XRP’s long-term prospects. The odds of an XRP ETF have risen to 80% as tweeted by analyst Ash Crypto. If the regulatory environment continues to evolve favorably, XRP could see renewed investor confidence and upward price momentum.
BREAKING: $XRP ETF APPROVAL ODDS
— Ash Crypto (@Ashcryptoreal) January 31, 2025
RISES TO 82% IN 2025.
BULLISH FOR ALTCOIN MARKET !! pic.twitter.com/f8CnvSTTsx
Furthermore, XRP might be positioned as a major participant in international liquidity solutions as a result of Ripple’s support for a more open stablecoin architecture. Ripple’s report emphasizes the need for regulatory clarity that promotes innovation while safeguarding consumers, as lawmakers’ attention turns more and more to the governance of digital assets.
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